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Dow Futures 2022 Update

Sep 16, 2022

Dow Futures 2022 Update & Forecast

By:Ryan Sullivan

How has the Dow traded in 2022? 

At 30,700 the Dow Futures (YM) are trading at levels we saw in February and March of 2021. The Dow is currently down 15.16 percent from its opening price of 2022. The Dow’s all-time high price was recorded on January 5th, 2022, at 36,832. 

Technically, we have been in a bear market for 2022, posting lower lows and lower highs. 2022’s price action has been orderly, for the most part. The sell offs in 2022 have pushed to new lows, then rallied back into a range we had traded at previously. Then sellers take back over and continue the push down. In general, there has not been wild selling that goes unchecked by the market. 

The rally that developed from mid-July through mid-August has sold off and returned us to the 30,500 to 31,000 range. Right now, we are developing a retest of the 30,000 to 31,000 area. The consolidation period at the end of June and early July indicates buyers active around that level.  

The next 30 days of trading will help define this range and determine if we want to continue lower, searching for new buyers, or if we have found support and the market will now move sideways.  

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

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How will the Dow trade for the rest of 2022? 

October, November, and December will show us what is going to happen to the Dow around the 30,000 level. We are beginning to retest this level now. Price will either bounce off this level or it will get caught around 30,000 briefly and continue lower.  

If we bounce from here, expect the market to move sideways for a period in the 30,000 to 34,000 range. If we continue lower and move through 30,000 with volume, looking for buyers, expect the market to continue lower for the rest of 2022.  

We must decide if there is enough information in the market to define a short-term bottom. Do we believe that the market has enough information to justify moving higher? Has all the bad information that’s come out been enough to shake out all the sellers? Is there information coming that we don’t know about, that will affect the market in a significant way? 

No one can answer those questions with exact confidence but as time goes by, we develop a clearer picture of what is and is not affecting the market. We also develop a picture of how much certain information will affect the market. We will soon need more negative information to justify further downward pressure.  

*tastyworks, Inc. and tastytrade, Inc. are separate but affiliated companies. 

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