Dow Futures Poised for New Highs?

Dow futures are lagging behind their peers, the S&P 500 and Nasdaq-100 futures, in reaching new all-time highs, despite making a solid upside move in recent weeks. The /YM contract topped out at 40,358 in terms of intraday all-time highs but saw a quick plunge after that point that took it all the way back down to 37,463 for a more than -7% decline in only 15 trading days. But just as quickly, price has recovered and is once again knocking on the door of those all-time highs with 10 of the past 12 candles being green for a +5.6% gain since the lows on May 1.

Price has a rather steep upward trendline in play beginning around the May 1 lows. Interestingly, another old trendline may be worth mentioning as well. An upward trendline beginning with the post-gap-up lows on Dec. 11 connects with a series of subsequent low points, but it was eventually broken during the downswing after the all-time highs. However, this trendline is roughly where price topped out yesterday, once again illustrating the trading adage that old support can become new resistance and vice-versa. In terms of trend, price is far above most common moving averages, which are also pointing upward and suggestive of a bullish trend.

The large-cap index futures also are showing bullish momentum according to the Relative Strength Index (RSI). This indicator exhibits a matching upward trendline with price, though it looks like RSI could be falling through it to the downside in early trading. However, RSI is also quite close to the overbought area, which is the threshold of 70. A push above this area would be another bullish sign for traders.

In terms of support, look to the recent lows near 39,405, and the 21-day Exponential Moving Average just below that, currently around 39,250. For upside resistance, the old highs of 40,358 are the obvious mark to watch. Beyond that, traders may consider the +1 Standard Deviation Channel (based on one standard deviation to the upside from a yearly Linear Regression Line), which currently comes in at about 41,851.