Federal Reserve Sends A Familiar Signal To The Dow Jones Industrial Average

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December 14, 2017 8:21am INDEXDJX:.DJI NYSE:DIA

Market technician Dave Chojnacki of Street One Financial recaps Wednesday’s market action, which was driven entirely by the Federal Reserve’s quarter-point rate hike announcement, and examines the key technical indicators that are sending mixed signals regarding the major U.S. indexes right now.


The CPI number was pretty much as expected on Wednesday morning, and equities opened higher. The major indices continued to march slowly higher, but investors were waiting for the FOMC announcement at 2pm. As expected, the FED raised rates a quarter point, and their language remained consistent with what we have seen the last few months — still looking for possible 3 more rate hikes next year.

The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) moved to new intraday highs before pulling back before the close. The DJIA managed to close positive at a new high, however, the SPX closed slightly lower on the day. The Nasdaq 100 (NDX) closed slightly positive.

At the close, the DJIA added 0.33%, the SPX slipped 1.2 points, and the NDX inched up 11 points. Breadth was slightly positive, 1.3 to 1, on below average volume. ROC(10)’s declined for the DJIA and SPX, however, they remained in positive territory. The NDX advanced, crossing back into positive territory.

RSI’s were mixed, with the DJIA and NDX inching higher and the SPX slipping a bit. The DJIA ended at 79.0, the strongest, the NDX at 60.4 and the SPX at 73.8. The DJIA and SPX remain with their MACD above signal, while the NDX remains below. The ARMS index ended at 1.32, indicating the weakness near the close.

The DJIA closed at 24585, the fourth record high in as many sessions. The DJIA traded as high as 24666, a new intra-day high. The upper Bollinger Band® sits at 24762. It remains comfortably above its 20D-SMA of 23934.

The NDX closed at 6394, and traded as high as 6416. It continues to regain the ground it lost and nears its closing record high of 6422. It closed above its 20D-SMA of 6344.

The SPX closed slightly lower at 2662, but hit an intra-day record high of 2671. Its 20D-SMA is at 2621. The VIX finished at 10.18, up 2.6%.

Near term support for the NDX is at 6375 and 6344. Near term resistance is at 6400 and 6422. Near term support for the SPX is at 2650 and 2625. Near term resistance is at 2664 and 2671.

Europe is lower in early trade Thursday, while U.S. Futures are slightly higher in the premarket. Major economic reports on tap today include Jobless Claims at 8:30am, Retail Sales at 8:30am, Import/Export Prices at 8:30am, and  Business Inventories at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.6 (+0.24%) in premarket trading Thursday. Year-to-date, DIA has gained 26.57%, versus a 20.44% 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 #3 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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