Short Term Bias For Dow Jones Industrial Average Remains Bullish

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June 18, 2018 8:45am INDEXDJX:.DJI NYSE:DIA

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Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with a deep dive into the underlying technicals for the major U.S. averages.

Economic data for Friday was mixed, though Consumer Sentiment ticked higher.   Traders seemed to be focused on Trade, as Washington confirmed that they would be placing a 25% tariff on $50 Billion of Chinese goods.  

Equities opened lower on Friday on the tariff news and the major averages had a tough time moving higher in the session. Techs, which were fairly strong last week, were having a weak session.  Despite ADBE reporting good numbers it was lower in the session. The Energy sector also underperformed on Friday. The Dow Jones Industrial Average (DJIA) and Nasdaq 100 (NDX) registered small losses on Friday, while the S&P 500 (SPX) gave up just a few points.              

At the close, the DJIA gave up 0.34%, the SPX slipped 2.8 points, and the NDX fell 0.33%. Breadth was slightly negative, on a pick-up in Options related volume.  ROC(10)’s fell across the board, but remained in positive territory. RSI’s fell in the session, with the NDX continuing to lead at 69.9. The DJIA slipped to 56 and the SPX fell to 62.4.  MACD’s remain above signal for all three averages. The ARMS index ended the day at 1.26, a slightly bearish reading.

It was mixed week for the major averages as the DJIA fell 0.8% for the week.  The SPX finished the week exactly where it started, 2779. The NDX was up 1.4%, the best performer for the week.  Short term bias remains to the upside, as all three major averages remain above their 50% retrace levels. The NDX set several new record highs during the week, hitting an intraday high of 7291.  

The DJIA closed at 25090, holding above its 20D-SMA of 24926. It briefly traded below that level on Friday. The SPX ended at 2779, holding above its 50% retrace level 2726. It also continues above its 20D-SMA of 2746.  Several times during the week the SPX found resistance near the 2788-2789 level. The NDX closed at 7255, comfortably above its 20D-SMA of 7071. It continues to be the best performer of the big three. The VIX ended the day at 11.98, down 1.1%.   For the week the VIX ended down 1.6%.

Near term support for the NDX is at 7200 and 7150. Near term resistance is at 7250 and 7291. Near term support for the SPX is at 2750 and 2746. Near term critical resistance is at 2788-89 and 2800.

Europe is significantly lower in early trade Monday, and U.S. Futures are pointing significantly lower in the premarket as well. The only major piece of economic news on tap today is the NAHB Housing Index at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $2.20 (-0.88%) in premarket trading Monday. Year-to-date, DIA has gained 2.20%, versus a 4.26% 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 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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