DJIA Extends Retracement - Forex News by FX Leaders
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With the first half of the U.S. session now in the books, the DJIA DOW (+0.13%) is once again lagging the S&P 500 SPX (+0.24%) and NASDAQ (+0.54%). At this point, two reasons are being cited as drivers of uncertainty. First, multiple cases of the mysterious coronavirus have been reported on U.S. soil. Second, Boeing (BA) is continuing its nightmare year on the stock market.

In a major development from late-Tuesday afternoon, airline manufacturer Boeing (BA) announced further delays to the relaunch of its 737 MAX aircraft. The 737 MAX has been grounded since last March following two devastating crashes. Initially, experts believed the embattled aircraft was to be recommissioned sometime during early-2020. This assertion has proven false, with a new date being tentatively suggested as “sometime this summer.” The news has sent BA stock plummeting by upwards of 8% over the last 24 hours.

Unfortunately for the DJIA, BA plays a big role in the market cap of the entire index. Given the brutal performance of the aerospace giant, the DOW continues to trail the S&P 500 and NASDAQ 100.

Is This The First Retracement Of 2020 For The DJIA?

At press time, the DJIA is trading very near scratch on the session. If we see a red close, it will be the first two-day run of negative returns since 2-3 December 2019 for March E-mini DOW futures.

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

Going into late-week trade, there are two levels worth watching in the March E-mini DOW:

  • Resistance(1): Swing High, 29362
  • Support(1): 38% Retracement of 2019’s Range, 28874

Bottom Line: In the event that the DJIA extends its brief losing streak, a buying opportunity may come to pass in the March E-mini DOW. As long as the Swing High (29362) remains valid, I will have buy orders in queue from just above the daily 38% Retracement (28874) at 28925. With an initial stop loss at 28750, this trade produces 175 ticks using a 1:1 risk vs reward management plan.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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