S&P 500

DOW Futures In Position To Extend Losing Streak

Posted Thursday, October 15, 2020 by
Shain Vernier • 2 min read

For the third-straight session, December E-mini DOW futures are well into the red. The negative price action is a bit perplexing for U.S. equities bulls, who opened the week driving toward all-time highs. Now, it appears that the tides have turned. At the midway point of the Wall Street session, the DJIA DOW (-107), S&P 500 SPX (-23), and NASDAQ (-138) are all in the red. A COVID-19 second wave and stimulus standoff are once again being credited for the equities market weakness.

It’s Thursday in the coronavirus world, and that means it’s time for U.S. unemployment. Here are this week’s jobless claims stats:

Event                                                                Actual                     Projected            Previous

Continuing Jobless Claims (Oct. 2)              10.018M                    10.700M             11.183M

Initial Jobless Claims (Oct. 9)                          898K                          825K                      845K

To sum up, Continuing Jobless Claims continue to fall, yet Initial Jobless Claims are on the uptick. All in all, this isn’t a good sign as it appears that the COVID-19 employment recovery is stalling. Two reasons for the rise in Initial Jobless Claims may be that the added unemployment benefits remain in place and many summer-season jobs are drawing to close. Of course, these figures remain extremely high and are a point of concern for politicians moving forward.

One saving grace for the DOW today was the Philadelphia FED Manufacturing Survey (Oct.). The figure came in at 32.3, more than doubling projections (14.0) and the previous release (15.0). This report was a good sign for the manufacturing sector, as the coronavirus economic recovery’s trajectory remains positive.

DOW In Negative Territory, Losing Streak Stands At Two

For the December E-mini DOW, bargain hunters are mounting a rally after a dreadful overnight session. Rates are well off intraday lows and may swing positive. Can the DOW snap its two-day losing streak?

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

Here are the levels worth watching in this market ahead of the weekend:

  • Resistance(1): All-Time High, 29,180
  • Support(1): Bollinger MP, 27,920
  • Support(2): 38% Macro Wave Retracement, 27,914

Bottom Line: If the December E-mini DOW continues its losing ways, a trend-following long trade will come into play. As long as the October high remains intact (28,846, not pictured), I’ll have buy orders in the queue from 27,928. With an initial stop loss at 27,848, this trade yields 80 ticks on a standard 1:1 risk vs reward ratio.

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