E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Testing 30,000 as Recession Fears Mount

September E-mini Dow Jones Industrial Average futures are sharply lower at the mid-session, piercing the psychological 30,000 level on Thursday as investors continued to trim long stock positions on worries the Federal Reserve’s aggressive tightening would push the economy into a recession.

At 18:04 GMT, September E-mini Dow Jones Industrial Average futures are trading 29976, down 675 or -2.20%. This is up from an intraday low of 29792. The SPDR Dow Jones Industrial Average ETF (DIA) is at $300.73, down 6.50 or -2.12%.

The Dow traded below 30,000 for the first time since January 4, 2021 after first breaking above that level for the first time in November 2020.

Nearly All Dow Components under Pressure

Home Depot, Intel, Walgreens, JPMorgan, 3M, and American Express hit new 52-week lows amid growing recession fears. Staple stocks, known for their steady cash flows that could hold up during recessions, traded into the green or near the flatline. Procter & Gamble gained 1.6% and Walmart was slightly higher at 1.76%.

Economic Data Signals Economic Slowdown

U.S. economic data out Thursday further indicated a dramatic slowdown in economic activity. Housing starts dropped 14% in May, topping the 2.6% decline expected by economists polled by Dow Jones. The Philadelphia Fed Business Index for June came in with a negative 3.3 reading, its first contraction since May 2020.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out the March 4, 2021 main bottom at 29987.

A trade through 33255 will change the main trend to up. This is highly unlikely but due to the prolonged move down in terms of price and time, the market is inside the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. A trade through 30999 will change the minor trend to up. This will also shift the momentum to the upside.

The minor range is 33255 to 29792. Its retracement zone at 31524 to 31932 is the nearest resistance.

Daily Swing Chart Technical Forecast

Trader reaction to 30651 will determine the direction of the September E-mini Dow into the close on Thursday.

Bearish Scenario

A sustained move under 30651 will indicate the presence of sellers. Taking out the intraday low at 29792 will indicate the selling pressure is getting stronger. This could trigger an acceleration to the downside with the February 1, 2021 main bottom at 29027 the next major bottom.

Bullish Scenario

A sustained move over 30651 will signal the presence of buyers. This would put the E-mini Dow in a position to post a potentially bullish closing price reversal bottom. Taking out the minor top will be a sign of strength with 31524 – 31932 the next potential upside target.