E-mini Dow Jones Industrial Average (YM) Futures Analysis – May 8, 2017 Forecast

June E-mini Dow Jones Industrial Average futures are trading lower after spiking higher earlier in the session. Buyers came in early in reaction to the French election results, but the rally dried up when the buying stopped, creating an opportunity for profit-taking and aggressive, counter-trend short-selling. The move stopped shortly before the contract high.

For two week’s investors pretty much knew that centrist Macron would defeat far-right candidate Le Pen so the outcome of the election came as no surprise. Additionally, because of this certainty, investors started to buy stocks in Europe and the U.S. before the election. Robust earnings also helped drive stocks higher. What we could be looking at early today is a “buy the rumor, sell the fact” market.

Now that the election is over as well as earnings season, investors are looking for a new catalyst to drive the Dow higher.

Technical Analysis

The main trend is up according to the daily swing chart. A trade through 21010 will signal a resumption of the uptrend. Today’s price action also made 20775 a new main bottom. A trade through this level will turn the main trend to down.

The inability to post a new high also creates a divergence with the NASDAQ and S&P 500 Index. This makes the Dow, the weakest of the three. If we’re going to have a change in trend to down, it will probably start with the Dow.

The Dow is also in a position to post a potentially bearish closing price reversal top. This would also be another indication that the selling is greater than the buying at current price levels.

Forecast

The short-term range is 21010 to 20775, its 50% level or pivot is 20893. This price is controlling the short-term direction of the market.

A sustained move over 20893 will indicate the presence of buyers. If it can attract enough buyers and generate a rally, it may make another run at 21010.

If 20893 fails as support and it becomes intraday resistance, we could see an acceleration into 20802. This is the last support before the 20775 main bottom.

The trend changes to down on a move under 20775. This is a potential trigger point for an acceleration into 20709.

Watch the price action and read the order flow at 20893 all session. Trader reaction to this level will determine the direction of the Dow today.