Geopolitical Turmoil Can’t Keep Dow Jones Industrial Average From New Highs

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September 18, 2017 8:10am INDEXDJX:.DJI NYSE:DIA


Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of last week’s big rally that took the major averages to new all-time highs, and looks ahead with an update of the important technical indicators.

Equities opened choppy on Friday, under the backdrop of another NOKO missile launch over Japan. Economic reports on Friday also disappointed, however, investors took all of this in stride as their sights are set on tax reform. The major indices traded in narrow range on a pick-up in volume, as it was options expiration.

Techs got a bounce on Friday helping the Nasdaq 100 (NDX) to a small gain. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) made new all-time highs, despite only making small gains.

At the close, the DJIA added 0.29%, the SPX was up 0.18%, and the NDX fell 0.32%. Breadth was positive, 1.8 to 1, on above average volume. ROC(10’s) were mixed, with the NDX crossing into negative territory. RSI’s are now in the upper 50’s to upper 60’s. The ARMS Index ended at 1.21, a bit bearish. For the week, the DJIA was up 2.1%, the SPX added 1.5%, and the NDX moved up 1.2%.

The VIX fell 2.6% to 10.17 on Friday, plunging 16% for the week.

Long term, the upside bias continues in the markets. The major indices all made new closing highs last week, and the DJIA and SPX made new intra-day highs. The major averages continue well above their 200D-SMA’s: DJIA-6.6%, NDX-8.9%, SPX-5.2%.

Short term, the major indices continue to keep the upside bias intact. The SPX saw its 20D-SMA cross above its 50D-SMA on Friday. It moved above its 9 month trend-line, which is now at 2485. The indices continued to strengthen their short term technicals. Near term, the momentum waned somewhat last week, but RSI’s remained in bullish territory. The DJIA is the strongest, with an RSI of 67.8. Near term critical support is now: DJIA-21600, NDX-5750, SPX-2417.

Europe is higher in early trade Monday, and U.S. Futures are pointing higher in the premarket. We get some Housing data this week and FOMC meeting on Wednesday, as geopolitical issues remain. Today, we’ll see the Housing Index numbers at 10:00am, which is the only major economic report on the slate.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.45 (+0.2%) in premarket trading Monday. Year-to-date, DIA has gained 14.31%, versus a 12.51% 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 #4 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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