Technicals Remain Bullish For The Dow Jones Industrial Average

Market technician Dave Chojnacki of Street One Financial wraps up the trading week with a recap of Thursday’s dull market action, and updates the important technical metrics to focus on as September draws to a close.

Despite decent economic numbers on Thursday, the averages languished at the open. Investors were still mulling over the impacts of the expected Tax Cut plan, as equities fell early.

Stocks quickly found support and then made a slow move to the upside throughout the remainder of the session. Technology issues were a little weaker in the session and prevented the Nasdaq 100 (NDX) from finishing in the black. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) managed to eke out a small gain and close near their highs of the session. The SPX even closed at a new all-time high.

At the close, the DJIA added 40.4 points, the SPX inched up 3 points, and the NDX slipped just 4.7 points. Breadth was slightly positive, 1.4 to 1, on below average volume. ROC(10)’s were mixed with the DJIA declining and the NDX and SPX advancing. The NDX remains the only index in negative territory.

RSI’s were mixed with the NDX falling to 50.9. The DJIA finished at 66.7 and the SPX ended at 65.1. The NDX remains as the only major index with its MACD below signal. The ARMS index ended the day at 1.17.

All in all, it was a somewhat dull day for the major averages, but again small caps were moving to new highs. The IWM (iShares Russell 200) ended with a closing high of 147.83 and an intraday high of 148.06. The DJIA closed at 22381, near its high of the session. It remains comfortably above its 20D-SMA of 22150.

The NDX lost a few points and closed 22 points below its 20D-SMA of 5955. It continues above its 50D-SMA of 5912. Its lower Bollinger Band® is now at 5880.

The SPX closed at a new all-time high of 2510. It remains above its 20D-SMA of 2490. It also continues above its 9 month trend-line of 2495.

The VIX fell 3.2% to 9.55, as volatility continues at extremely low levels.

Near term support for the NDX is at 5925 and 5912. Near term resistance is at 5955 and 5975. Near term support for the SPX is at 2500 and 2495. Near term resistance is at 2510 and 2511.

Europe is higher in early trade Friday, while U.S. Futures are pointing slightly lower in the premarket. Major economic reports to wrap up the week will include Personal Income at 8:30am, Chicago PMI at 9:45am, and Consumer Sentiment at 10:00am.

The SPDR Dow Jones Industrial Average ETF (DIA) fell $0.20 (-0.09%) in premarket trading Friday. Year-to-date, DIA has gained 14.90%, versus a 13.03% 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 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.