Will Thanksgiving Be Kind To The Dow Jones Industrial Average?

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November 20, 2017 8:14am INDEXDJX:.DJI NYSE:DIA

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Market technician Dave Chojnacki of Street One Financial kicks off the holiday-shortened trading week with a deep dive into the technicals for the major U.S. averages, which closed last week on a rare bearish note.

Equities ended the week quietly on Friday, despite the fact that options were expiring. Good earnings from the Retail Sales sector were a boost to equities early on. The major indices traded in a narrow range on Friday, with the S&P 500 (SPX) moving in only a 6 point range.

When the session ended on Friday, all three major averages closed with small losses. At the close, the Dow Jones Industrial Average (DJIA) fell 0.43%, the SPX gave up 0.26%, and the Nasdaq 100 (NDX) was lower by 0.39%. Breadth was positive, 1.9 to1, on above average volume, as market volume spiked on the options expiration.

RSI’s fell, with the NDX at 63.2 and the only index in the 60’s. The DJIA and SPX are at 55. The ARMS Index ended at 1.06, a neutral reading at the close. The trade was choppy during the week, but in a very narrow range. For the week, the DJIA fell 0.2%, the SPX slipped just 4 points, and the NDX added 5 points.

The VIX ended last week at 11.43, rising just 0.14 of a point for the week. In the coming holiday shortened week, economic reports are light and most earnings from major companies have already been reported. In other words, expect things to be pretty quiet out there.

Long term, the upside bias for stocks continues. The major indices were flat last week and have been in a narrow range. On October 20th, the SPX closed at 2575, and on Friday it closed at 2578. We can make a case that a “Bull Handle” is developing and another spike to the upside is coming.

The Major indices continue well above their 150D-SMA’s: DJIA-21911, SPX-2469, NDX-5882.

Short term, the major averages continue strong as well. All three averages are comfortably above 6 month lows. Near term, the major indices are also above their 50D-SMA’s, which are providing critical near term support: DJIA-22922, SPX-2547, NDX-6104. We do have near term weakness with MACD’s below signal and momentum falling in the last 2 weeks, however, which is worth monitoring in coming sessions.

Europe is slightly higher in early trade Monday, while U.S. Futures are mixed in the premarket. The only major economic report on tap today is Leading Indicators at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $0.03 (-0.01%) in premarket trading Monday. Year-to-date, DIA has gained 19.93%, versus a 16.42% 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 80 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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