Momentum Waning For Dow Jones Industrial Average

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September 12, 2018 8:42am INDEXDJX:.DJI NYSE:DIA

Market technician Dave Chojnacki of StreetOne Technical Analysis recaps Tuesday’s anemic market action and previews Wednesday’s session with an update of the important underlying technicals for the major U.S. averages.

Economic numbers on Tuesday morning came in as expected, with Job Openings continuing to rise.   Despite the good news equities opened lower, but quickly reversed their course. The major averages got stronger as the morning wore on.   Leaks of some progress with Canada and China trade talks added some buyers to the market. Techs had their second positive day and pushed the NDX to be the best gainer in the session.   The Dow Jones Industrial Average (DJIA) and SPX closed the day with small gains, as they continue their consolidation. The 10YR ended the day at 2.98, as it grows closer to 3%.            

At the close on Tuesday, the DJIA was up 0.44%, the SPX added 0.37%, and the NDX gained 0.81%.  Breadth was only slightly positive, on average volume. ROC(10)’s declined for all three major averages, with the DJIA and SPX crossing into negative territory.  The NDX remains in negative territory. RSI’s advanced in the session, with the DJIA the strongest at 60.1. The NDX is now at 53.8 and the SPX ended at 58.9. All three major indices remain with their MACD’s below signal.  The ARMS index ended the day at 0.88, a slightly bullish reading at the close.

With ROC(10)’s moving into negative territory, they are indicating the falling momentum over the near term.  With MACD’s below signal, near term weakness remains. With all 3 major indices closing above their 20D-SMA’s, we see this as more a consolidation period then a pullback.  The NDX ended positive for the second straight session and closed at 7507. It closed above its 20D-SMA of 7485.

The NDX has additional support at its 50D-SMA of 7392. The DJIA ended the day at 25971.  It closed above its 20D-SMA of 25815. The DJIA did not make a new record high recently, but has the strongest RSI of the big three. The SPX traded below its 20D-SMA(2873) during the session, but closed above at 2887.   It remains within striking distance of its recent record high of 2916. The VIX added 6.6% to 13.22.

Near term support for the NDX is at 7485 and 7400. Near term resistance is at 7550 and 7600. Near term support for the SPX is at 2873 and 2850.  Near term resistance is at 2900 and 2914.

Europe is higher in early trade Wednesday, while US Futures are mixed in the premarket. The only major piece of economic info out today is the Producer Price Index at 8:30am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $0.07 (-0.03%) in premarket trading Wednesday. Year-to-date, DIA has gained 5.99%, versus a 8.75% 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 82 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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