Technicals Remain Bearish For Dow Jones Industrial Average

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

Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with an update of the important technical indicators for the major U.S. averages.

Economic Numbers on Friday came in close to expected and the market got off to a good start.  Trade is still on everyone’s minds, but the general consensus is that resolutions will be found and a trade war alleviated.    

Good numbers by Nike and Techs recovering from their recent pullback, contributed to the major indices moving higher during the morning hours.    Equities traded flat through the PM hours, until a sell-off in the final hour. Traders were trimming their positions going into a holiday shortened week.   The 10YR remained low finishing at 2.85%. The final bell saw the averages closing with only slight gains.

At the close, the Dow Jones Industrial Average (DJIA) added 55.3 points, the S&P 500 (SPX) gained just 2 points, and the Nasdaq 100 (NDX) was up 9.2 points.  Breadth was positive, 1.3 to 1, on above average volume. ROC(10)’s advanced in the session, with all three major averages remaining in negative territory.   RSI’s were nearly flat, with the NDX continuing to be the strongest at 46.7. The DJIA ended at 39.4, and the SPX finishing at 44.3. MACD’s remain below signal for all three major indices.  The ARMS index ended the day at 1.27, a slightly bearish reading.

The major averages attempted to salvage their week on Friday, but a last hour sell-off left them down for the week.  For the week, the DJIA fell 1.2%, the SPX gave up 1.2%, and the big loser, the NDX, down 2.1%. The DJIA closed at 24271, continuing below its 200D-SMA of 24323.  The DJIA continues to be the weakest of all three major indices, both near and short term. Critical long term support is at 23344. The DJIA is sitting several hundred points below its 50D-SMA of 24620.  

The NDX ended on Friday at 7040, managing to hold above its 50D-SMA of 6957. It remains below its 20D-SMA 7163. Technically, the NDX is the strongest of the big three indices. It was just 2 weeks ago that the NDX hit new highs.   The SPX closed at 2718, just one point above its 50D-SMA of 2717. It remains below its 20D-SMA of 2755 and its 50% retrace level of 2726. The VIX fell 4.5% to finish at 16.09.

Near term support for the NDX is at 7000 and 6957. Near term resistance is at 7163 and 7200.   Near term support for the SPX is at 2712 and 2700. Near term critical resistance is at 2726 and 2755.

Europe is pointing lower in early trade Monday, and U.S. Futures are significantly lower in the premarket. Major economic reports on tap today include PMI Manufacturing at 9:45am, ISM Manufacturing at 10:00am, and Construction Spending at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $1.53 (-0.63%) in premarket trading Monday. Year-to-date, DIA has declined -1.06%, versus a 2.06% 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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