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DOW Opens Flat And On A Losing Streak

Posted Wednesday, June 20, 2018 by
Shain Vernier • 2 min read

It seems like only yesterday the U.S. indices were threatening to break heavily to the bull and establish fresh all-time highs. Optimism over the positive outcome of the U.S./North Korea summit led investors to embrace a risk-on mentality. Tariffs and threats of a hot trade war have destroyed the good cheer. The result has been a six-day losing streak for the DOW.

Today’s opening hour has been near flat. At press time, the DOW is slightly in the red and S&P 500 is up moderately.

Earlier, U.S. Existing Home Sales (MoM, May) came in beneath expectations, down -0.4% month-over-month. This was a disappointment to consensus estimates of +1.5%. The downturn is being chalked up to lagging home supplies. However, data for new construction and new home sales have also underperformed expectations the last few months. Is construction and mortgage lending already getting tight in the U.S.?

DOW Technical Outlook

The September E-mini DOW futures (YM) are in the midst of a significant losing streak. Today’s session is still up in the air, but we may be in for yet another red close.

September E-mini DOW Futures (YM), Daily Chart
September E-mini DOW Futures (YM), Daily Chart

Here are the levels to watch for the remainder of the U.S. session:

  • Resistance(1): Daily SMA, 24796
  • Resistance(2): Bollinger MP, 24900
  • Support(1): 78% Macro Retracement, 24517

Bottom Line: 25,000 is quickly becoming a distant memory as trade war angst continues to bury this market. Price rejected the Daily SMA during the overnight and appears to be headed south.

For the rest of the session, I will be looking to go long the September E-mini DOW from just above the 78% Macro Retracement at 24526. With an initial stop at 24498, this trade produces 28 ticks using a 1:1 risk vs reward scenario.

With the presence of both a macro support level and round number (24500), we are likely to see buyers step and defend this area.

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