Expect Volatility To Return To Dow Jones Industrial Average This Week

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June 11, 2018 9:20am INDEXDJX:.DJI NYSE:DIA

Market technician Dave Chojnacki of StreetOne Technical Analysis recaps last week’s bullish action and previews what promises to be a volatile week for equities amid geopolitical turmoil.

Equities opened slightly lower on Friday, as Techs continued to consolidate after their recent new record highs. The major averages reversed after the European close with the strength in the Health Care sector.

Small caps also continued their recent strength as noted in the IWM (iShares Russell 2000), which ended the day up 0.3%. Equities continued to make some gains and held their own going into the close. By the end of the session the Nasdaq 100 (NDX) was nearly stagnant, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed with small gains.

At the close on Friday, the DJIA added 0.3%, the SPX gained 0.31%, and the NDX slipped just 0.21 of a point. Breadth was positive, 1.4 to 1, on average volume. ROC(10)’s advanced, with all three major averages remaining in positive territory. RSI’s were mixed, with the NDX moving lower to 66.4. The NDX continues to lead the major indices. The DJIA and SPX moved slightly higher to 63.5 and 64.6, respectively. MACD’s remain above signal for all three averages. The ARMS index ended the day at 0.68, a bullish reading.

The major averages had a fairly good week, with all three major indices now above their 50% retrace levels. There was some consolidation in Techs at the end of the week and some healthy sector rotation. For the week, the DJIA was up 2.7%, the SPX gained 1.6%, and the NDX added 0.9%. The DJIA closed at 25316, holding above that all-important 50% retrace level of 25074. It continues to hold comfortably above its 20D-SMA of 24816.

The SPX ended the day at 2779, its high of the session. The SPX continues above its 20D-SMA of 2731. The next critical resistance is at 2800. The NDX closed at 7152, as we saw some consolidation at the end of the week. It remains comfortably above its 50% retrace level of 6760. The NDX 20D-SMA is at 6997 and should provide short term support. The VIX ended Friday at 12.18, up 0.4%. Volatility remains relatively low.

Near term support for the NDX is at 7100 and 6997. Near term resistance is at 7200 and 7250. Near term support for the SPX is at 2750 and 2731. Near term critical resistance is at 2788 and 2800.

The FOMC announces their rate decision this week, with expectations that they may raise again. With so many major events this week, prepare for a volatile market.

Europe is slightly higher in early trade Monday, while U.S. Futures are mixed and little changed  in the premarket.

The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.07 (+0.03%) in premarket trading Monday. Year-to-date, DIA has gained 3.26%, versus a 4.66% 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 StreetOne Technical Analysis. In addition, he is Portfolio Manager for Sabretooth Advisors.

Dave develops 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.

Prior to joining StreetOne Technical Analysis, Dave designed and developed I/T Systems for the Insurance and Financial Industries.

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