Where next for the YM mini Dow

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Where next for the YM mini Dow

The YM mini dow index on the daily chart
YM Mini Dow – daily chart

Like many of the major equity markets around the world, the mini Dow index has now reached a critical level, with the daily September contract closing at 13,079 ahead of the 3 day weekend with markets closed on Monday for the US labor day.

Since March, the index has flirted with the 13,200 level on several occasions and each time, Hawkeye has delivered an isolated pivot high, giving a clear signal of future weakness at this level. These pivots have now created a strong level of price resistance in this area, and if the recent bullish momentum is to continue, then we will need to see a clear break and hold above this level. Friday’s price action suggests something different in the short term however, with the first red trend dot appearing on the daily YM chart, coupled with a transition in the Hawkeye Heatmap from dark green to bright red, a strong bearish signal.

This change in sentiment has also been accompanied by rising selling volume over the last few days, once again suggesting a bearish move lower, with the isolated pivot high of Monday adding more weight to this analysis. All of this has been reflected in the VIX which has been rising strongly over the last few days, and with the FED sitting firmly on the fence for the time being, we are in for some interesting times for equity markets and the YM in particular as traders and investors return to the markets with a vengeance following the long summer recess.

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