Near-Term Technicals Still Weak For The Dow Jones Industrial Average

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April 2, 2018 7:55am INDEXDJX:.DJI NYSE:DIA

Market technician Dave Chojnacki of Street One Financial recaps last week’s back-and-forth market action and looks ahead to the new week, which promises to bring plenty of fireworks to what’s already been quite a volatile year for equities.

The major indices opened higher on Thursday and never looked back.  Techs were finally having a good day and helping to push the Nasdaq 100 (NDX) to significant gains.  The FANG stocks were strong on the day as they look to build a bottom.

The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) also closed with significant gains despite a last hour sell-off, before the long holiday weekend.  The trading last week was choppy, but typical of indices looking to make a base. At the close on Friday, the DJIA was up 1%, the SPX closed up 1.3%, and the NDX added 1.86%. Breadth was decidedly positive, 3.4 to 1, on average volume.  

RSI’s moved higher with the DJIA leading at 43.1. The SPX ended at 42.7 and the NDX at 42.2. The ARMS index ended at 0.85, a bullish reading. For the week, the DJIA added 2.4%, the SPX gained 2%, and the NDX was up 1.1%. The VIX fell 12.6% on Friday to 19.97.  For the week, the VIX was down 20%. This week, we get key manufacturing data and the Employment report at the end of the week.

Long term, technicals were challenged again last week as the SPX and DJIA traded near their 200D-SMA.  The DJIA 200D is at 23412 and the SPX is at 2589. Both indices also traded below their 1 year trend-lines of DJIA (23800) and SPX (2612).  The DJIA and SPX are both now lower for the year.

The NDX has held up long term, as its 200D-SMA is well below current levels at 6267.

Short term, the bias remains to the downside.  The major indices tested 10% correction levels last week. All three major indices are well below their 50D-SMA’s: DJIA-25066, SPX-2729, NDX-6807. Near term technicals remain weak, although the major indices tried to form a bottom last week. All 3 major averages have their MACD’s below signal and are below their 20D-SMA’s.  

European markets are closed today, while U.S. Futures are pointing lower in the premarket. Major economic reports on tap today include PMI Manufacturing Index at 9:45am, ISM Manufacturing Index at 10:00am, and Construction Spending at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $1.08 (-0.45%) in premarket trading Monday. Year-to-date, DIA has declined -2.42%, versus a -1.39% 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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