Dow Jones Industrial Average Finally Takes A Breather From Record Highs

Technical analyst Dave Chojnacki of Street One Financial examines Monday’s much-needed market pullback and updates the important technical levels to watch for the major U.S. indexes as we head into November.

Equities opened mixed on Monday morning, as investors received good economic reports. Indictments in D.C. had little impact on the markets, as no one in the administration was a target.

Techs were strong again, pushing the Nasdaq 100 (NDX) to new highs. The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) lagged in the session, as they took a breather from their recent highs. Volume continued above average, as we may have seen some investors re-balancing their portfolios at the end of the month.

Note that trading may be slow mid-week, as investors wait for the Employment Report on Friday.

At the close yesterday, the DJIA fell 0.36%, the SPX gave up 0.32%, and the NDX added 14.1 points. Breadth was negative, 1.5 to 1, on above average volume. ROC(10)’s declined in the session, but all three remain in positive territory. RSI’s moved lower for the DJIA and SPX, and ended as 72.1 and 64.8, respectively. The NDX moved higher, finishing at 70.6.

The DJIA and NDX remain with their MACD above signal. The SPX MACD continues below signal. The ARMS index ended at 1.11, a slightly bearish reading.

We saw some near term weakness in the DJIA and SPX, which was also widespread in the negative breadth. The NDX was index moving higher closing at 6227 a new high. The NDX also traded at a new intraday high of 6250. It closed above its upper Bollinger Band® of 6197. The NDX continues well above its 20D-SMA of 6085.

The DJIA closed at 23348, above its 20D-SMA of 23043. The SPX traded right to its upper Bollinger Band of 2580 and then pulled back to close at 2572. Its 20D-SMA sits at 2557.

The VIX moved back above the 10 handle, adding 7.1%, to finish at 10.50.

Near term support for the NDX is at 6200, 6197 and 6175. Near term resistance is at 6250 and 6275. Near term support for the SPX is at 2557 and 2550. Near term resistance is at 2575, 2580-82 and 2588.

Europe is higher in early trade, while U.S. Futures are pointing higher in the premarket. Economic reports on tap today include Employment Cost Index at 8:30am, Chicago PMI at 9:45am, and Consumer Confidence at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.35 (+0.15%) in premarket trading Tuesday. Year-to-date, DIA has gained 19.90%, versus a 15.92% 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 76 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.