Dow Jones Industrial Average Remains Weak Versus Nasdaq, S&P 500

Despite a big bounce in crude oil and energy stocks on Wednesday, the Dow continues to lag while the Nasdaq leads. Technical analyst Dave Chojnacki of Street One Financial recaps the recent market action and dives into the important technical levels that investors and traders should key on.

Equities opened lower on Wednesday, as investors tried to shrug off the news out of D.C. of the FBI Director Comey firing. An unexpectedly large drawdown in Oil inventories pushed Energy higher in the session and helped equities to reverse late morning. The remainder of the session was dull, with the averages changing very little on the day.

The Dow Jones Industrial Average (DJIA) was the only loser, helped by a drop in Boeing (BA), which fell 1.2%. The Nasdaq 100 (NDX) and S&P 500 (SPX) were slightly higher at the close, triggering new closing highs of 5681 and 2399.65, respectively.

At the close, the DJIA fell 32.6 points, the SPX inched up 2.7 points, and the NDX added 3.3 points. Breadth was positive, 2 to 1, on below average volume. ROC(10)’s were mixed in the session, with the DJIA the only major average declining. RSI’s were also mixed, with the DJIA dropping slightly and the NDX and SPX rising. The NDX continues at an overbought level of 79.9.

All three major averages remain with their MACD above signal. The ARMS index ended the day at 0.62, a fairly bullish reading. The NDX closed at a new high for the fourth straight session. It moved up only a few points and volume was light, but yet again, it continues to be the leading index. It is comfortably above its 20D-SMA of 5537. The DJIA was slightly lower on the day, but it too remains well above its 20D-SMA of 20805.

The DJIA remains 172 points from its all-time closing of 21115, established in March. The SPX also melted up to a new closing high, but was unable to get above 2400 in the session. Its 20D-SMA sits at 2374.

IWM (iShares Russell 2000) had a decent day, up 0.62%, to 139.21. This reflects the good breadth we witnessed yesterday. The VIX added 2.5% to finish at 10.21, up for the second straight session.

Near term support for the NDX is at 5675 and 5650. Near term resistance is at 5700 and 5725. Near term support for the SPX is at 2388 and 2375. Near term resistance is at 2400, 2403, and 2412.

Europe is mostly higher in early trade, but U.S. Futures are pointing lower in the premarket. The only two major economic reports on tap today are Jobless Claims at 8:30am and Natural Gas Inventories at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.20 (-0.10%) in premarket trading Thursday. Year-to-date, DIA has gained 6.06%, versus a 7.31% 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 #5 of 75 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.