Dow Futures Edge Higher After Week-long Slide, Where Next?
What have the Dow Futures been doing this year?
Dow futures are currently trading at 32,461, down 3.06% from its opening price of 2023. Dow Futures moved sideways for the first two months of the year. In the middle of February, they began taking a bearish stance.
Current price action has bounced off the low of the year, which was recorded on March 13th, 2023, at 31,740. Based on price action, it appears that this will form a short-term bottom for the Dow, as we have approached key support and appear to have found buyers.
For additional details on Dow Futures, please refer to the Dow futures January update.
How will the Dow trade in the near future?
The price of the Dow, at 32,461, is in a position that could easily continue lower or rebound higher. There are good reasons for market participants to continue to react to fear. There are many uncertainties that exist in the market which could push prices lower.
At the same time, we have spent the last thirty days moving lower looking for buyers. Eventually, buyers are going to take the opportunity to apply some buying pressure and push the market higher for a period of time. We appear to be entering that situation now.
Given the opportunity for both continued bearishness and a bullish rebound, it is likely that the market will continue to move sideways. It’s also possible that Dow develops a range in 2023 that it bounces between.
What is moving the market?
The collapse of SIVB, along with uncertainty surrounding interest rate hikes, is creating an environment where market participants disagree on price. These disagreements create buyers and sellers at many different levels, which increases volatility.
As premium sellers, this is useful. Selling premium requires uncertainty and current market conditions lend themselves to selling premiums and taking on some of the risk in the market. If the market does continue to move sideways and we sell premium now, we will be setup in the ideal position to collect profit on our trades.
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