Dow Futures Update January 2023

Dow Futures Update January 2023: Can the Uptrend Continue?

By:Ryan Sullivan

What are Dow Futures?

The Dow Jones Industrial Average (DJIA) is an index that tracks 30 large companies trading on the New York Stock Exchange (NYSE) and Nasdaq. The composition of the index changes over time to reflect the most relevant stocks trading in the market. The DJIA index itself cannot be traded. You must trade a financial instrument that tracks the DJIA index in order to trade the movements of the index.

The E-Mini Dow Futures (/YM) contract is a financial instrument that can be traded. The E-Mini Dow Futures contract ticker is /YM. The /YM contract is very liquid and offers several benefits to the trader. This contract is leveraged and offers direct exposure to the price movements of the index’s composition. Futures contracts exist for a specified length of time before expiring and then being replaced with a new contract that extends further into the future.

The Dow Industrials SPDR (DIA) fund is an ETF that can be traded. This fund consists of the same components as the DJIA index. DIA can be bought and sold in the same way that you would buy /YM, however the price of DIA is calculated differently and does not match the price of the index in the same way that the /YM futures contract will.

DIA has options and its options markets are very liquid. If you want to trade options around the movements of the Dow Jones Industrial Average (DJIA), DIA is a good proxy.

Fig. 1: Year-to-date price percent change for DIA, SPY, GLD, and TLT.
Fig. 1: Year-to-date price percent change for DIA, SPY, GLD, and TLT.

How has the Dow traded so far in 2023?

The E-Mini Dow Futures (/YM) contract is currently trading at 33,787, up 0.16% from its opening price of 2023. Price action remains in a breakout range from the downtrend channel in 2023. The 32,645 to 34,450 range has been a comfortable range for the Dow so far in 2023. Buyers and sellers have been hesitant to move out of this range in the last three weeks.

Support exists below the current range around 32,071 and resistance exists above the current range around 25,274. Price action bounced off this resistance level in mid-December of last year.

Price action in 2023 has been sideways. Big rallies have been sold off and any velocity to the downside is met with support. Market volatility has been relatively low so far compared to last year.

Where is the Dow heading next?

Technically speaking, price action currently appears to be forming a bull flag, but since that pattern is apparent, we could also be forming a topping pattern that will lead to a short-term reversal. Taking a step back and looking at price action since October of last year, it is very possible that buyers are out of steam and sellers have been taking over for the last three weeks.

If we get a down move from here, look for price to test support around 32,000. If we get an up move, it is possible that the price tests all-time highs.

Our current Dow range sits in the middle of 2022’s range. Market sentiment is mixed. Since volatility is low, premium selling opportunities are less prevalent. Directional plays in this environment are likely necessary to collect enough premium to put a trade on. Be ready to adjust delta-neutral positions if we get a breakout to the upside or downside from our current range.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.