Where Is The Dow Jones Industrial Average Headed Next?

June 19, 2017 8:08am INDEXDJX:.DJI NYSE:DIA

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Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with an update of the important technical levels to focus on for the major U.S. averages, which continue to be in flux amid a weakening tech sector.


Amazon-Whole Foods Merger Fails To Inspire Buyers

Some disappointing economic news pushed equities downward at the open on Friday. Even a mega acquisition by Amazon of Whole Foods couldn’t help the major averages push higher. Once again Techs were being hit the hardest, although retail names plunged on the Amazon news.

By late morning, the indices reversed and moved higher through the remainder of the session. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) managed to get into positive territory by the close, while the Nasdaq 100 (NDX) continued its losing ways. At the close, the DJIA was up 24.3 points, the SPX inched up 0.69 of a point, and the NDX fell 0.34%.

Technicals Are Still Bullish

Breadth was positive, 1.4 to 1, on heavy volume, which was a result of options expiration. RSI’s were little changed, with the DJIA continuing to lead at 68.5. The SPX is at 60.9 and the NDX at 44.4.

For the week, the DJIA gained 0.5%, the SPX adding just 2 points, and the NDX declined 1%. The VIX fell 4.7% on Friday to 10.38. It was up 2.5 % for the week. This week will be fairly light in economic reports, however, we do receive more Housing Data.

Long term, the upside bias continues, with the DJIA and SPX making new highs last week. The NDX has been pulling back recently. The DJT (Dow Transports) has yet to give a Dow Theory confirmation of Industrials.

All three major indices remain above long term 200 day moving average: DJIA- 19821, SPX- 2280, NDX-5169.

Short term, the bias remains to the upside. The averages are comfortably above 50% retracement levels. Near term, the NDX continued its slide with weakening near term technicals. We also saw the SPX MACD cross below signal, which sends up the caution flag.

All three major averages continue to hold critical near term support levels of: DJIA- 20553, SPX-2352, NDX-5568.

Europe is higher in early trade Monday, and U.S. Futures are moderately higher in the premarket. With no major economic reports on tap today, the markets will likely focus on the implications of the Amazon-Whole Foods deal and how it may change the technology and retail landscape.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.69 (+0.32%) in premarket trading Monday. Year-to-date, DIA has gained 8.13%, versus a 8.55% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #5 of 75 ETFs in the Large Cap Value ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, David Chojnacki, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Dave Chojnacki

Dave Chojnacki is the Chief Market Technician at Street One Financial. He provides technical support for the Street One team and also develops individual analysis for Clients as requested.

Dave is a major contributor to the ‘ETF Daily’, a morning newsletter providing clients a daily look at market technicals of the major indices and selected ETF’s. Market trends, support and resistance levels are provided in the daily letter. The Technical portion of the daily can also be found on Seeking Alpha. Mr. Chojnacki has been quoted in a number of industry publications including the Reuters, ETF Trends, Minyanville, Yahoo Financial and Investors.Com.

In addition, Dave assists with desk trading when necessary. He possesses a Series 7 and 63.

Prior to joining Street One, Dave designed and developed I/T Systems for the Insurance and Financial Industries.


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