Dow Jones Industrial Average Winning Streak Ends At Five

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

Equities opened lower on Thursday, despite excellent Employment Claims numbers.   The major indices found support after the first half-hour of trading, but then traded sideways for the remainder of the session.  Good earnings by Techs(IBM, etc) could not help lift the averages higher. We saw all the major indices end the day with small losses.  The Dow Jones Industrial Average (DJIA) ended a five day streak to the upside. Despite the major averages being down in the session the breadth was positive, on below average volume.  The 10YR finished at 2.85%.

At the close on Thursday, the DJIA was down 0.53%, the S&P 500 (SPX) fell 0.4%, and the Nasdaq 100 (NDX) dropped 0.5%. Breadth was positive, 1.5 to 1, on below average volume.   ROC(10)’s declined in the session, but all three major averages remained in positive territory. RSI’s moved lower with the NDX and SPX leading at 61. The DJIA ended at 58.6.  All three MACD’s remain above signal. The ARMS index ended the day at 1.75, a fairly bearish reading at the close.

The DJIA broke its streak of 5 up days and remains the weakest of indices in the near term.  It closed at 25064, dropping just below its 50% retrace level of 25074. It remains above its 50D-SMA of 24766.  The NDX ended the day at 7352, remaining the strongest index. It sits just 51 points below its record closing high(7403) of 2 days ago.  It is comfortably above its 20D-SMA of 7201.

The SPX closed at 2804, but found resistance during the session at 2812. It remains above its 20D-SMA of 2759 and its 50D-SMA of 2749.  The VIX added 6.3% to 12.87.

Near term support for the NDX is at 7350 and 7300. Near term resistance is at 7403 and 7419. Near term support for the SPX is at 2800 and 2788. Near term critical resistance is at 2812 and 2825.  

Europe is lower in early trade Friday, while U.S. Futures are mixed pre-market. There are no major economic reports on tap today.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $1.06 (-0.42%) in premarket trading Friday. Year-to-date, DIA has gained 2.22%, versus a 5.34% 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.