E-mini Dow Jones Industrial Average (YM) Futures Analysis – Investors Transitioning from Buying Strength to Seeking Value

December E-mini Dow Jones Industrial Average futures finished lower on Friday while posting an inside move. The price action suggests investor indecision and impending volatility. Investors are worried about whether the Senate and House can pass the tax reform bill before the end of the year, and the widening of the Mueller probe.

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the 23557 top on November 7. The Dow has also diverged from the NASDAQ-100 Index which suggests investors aren’t on the same page at this time.

A trade through 23557 will signal a resumption of the uptrend. A move through 23203 will change the minor trend to up. This will indicate that the selling pressure is increasing.

The short-term range is 23557 to 23205. Its 50% level or pivot is 23381. The price action suggests this level is controlling the short-term direction of the market. The close below this level is giving the Dow a short-term downside bias.

The intermediate range is 22951 to 23557. Its retracement zone at 23254 to 23182 is acting like support. This zone stopped the selling on November 15 when the Dow formed a minor bottom at 23205.

The main range is 22174 to 23557. If the intermediate zone fails as support, we could see an acceleration to the downside into is retracement zone at 22866 to 22702.

The price action suggests investors are having a hard time buying strength at this time due to the lingering political issues. This could encourage them to continue to pare positions which could lead to an eventual test of the main retracement zone at 22866 to 22702.

At this time, investors may be making the transition from buying strength to buying value.