Trendless Dow Jones Industrial Average Looks To Establish Next Leg Up

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April 12, 2018 7:53am INDEXDJX:.DJI NYSE:DIA

Market technician Dave Chojnacki of Street One Financial recaps Wednesday’s bearish market action and looks ahead to Thursday’s session with an update of the important technical levels to watch for the major U.S. averages.

After a strong day on Tuesday, geopolitical issues kicked the major indices off to the downside.   Retaliation for Syria chemical attacks and Russian involvement put the world markets on edge.   The indices were down moderately early in the session and made several attempts to move to the upside.

Once we reached the noon hour, the averages made a steady move to the downside, which lasted into the final hour.   The Nasdaq 100 (NDX) was the better performer in the session, while the Dow Jones Industrial Average (DJIA) was the weakest.   Gold and Energy were nearing 52 week highs.

At the close, the DJIA gave up 0.9%, the S&P 500 (SPX) fell 0.55%, and the NDX lost 0.49%. Breadth was slightly positive, on below average volume.   ROC(10)’s advanced in the session, with the NDX and SPX crossing into positive territory. All three major indices are now in positive territory.

RSI’s moved slightly lower, with the DJIA the strongest at 47.4. The NDX finished at 46.8 and the SPX at 47. The SPX and DJIA MACD remain above signal. The NDX is the only major index with its MACD below signal. The ARMS index ended the day at 0.61, a bullish reading.

The major indices ended to the downside yesterday, but the weakness was not across the board.   Breadth was slightly positive, with gainers outpacing decliners.   This manifested itself in the IWM (iShares Russell 2000) which was up 0.22% in the session.

The DJIA was the worst performer of the big three, closing at 24489. It remains above its 20D-SMA of 24252. The DJIA continues below its 50D-SMA of 24721. The SPX continues just below its 20D-SMA(2658), closing at 2642. It remains comfortably above its 200D-SMA of 2596. The NDX closed at 6583, continuing below its 20D-SMA(6666) and its 50D-SMA(6742).

The VIX fell 1.1% to 20.24. The VIX remains with a 20 handle, suggesting more downside could be in store.

Near term support for the NDX is at 6550 and 6500. Near term resistance is at 6600 and 6666. Near term support for the SPX is at 2625 and 2612. Near term resistance is at 2658 and 2696.

Europe is trending higher in early trade, and U.S. Futures are pointing higher in the premarket. Major economic reports on tap today include Jobless Claims at 8:30am, Import/Export Prices also at 8:30am, and the EIA Natural Gas report at 10:30am.

The SPDR Dow Jones Industrial Average ETF (DIA) rose $1.16 (+0.48%) in premarket trading Thursday. Year-to-date, DIA has declined -2.22%, versus a -1.16% 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 81 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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