Bullish Bias Continues For The Dow Jones Industrial Average

Market Technician Dave Chojnacki of Street One Financial kicks off the new trading week with a key update of the important technicals for the major U.S. stock indexes, as all signs point to more gains in the week ahead.

The market opened to the downside on Friday, but decent Housing numbers helped to reverse direction. The action was choppy during the session and we saw Techs gathering inflows again and helping to push the Nasdaq 100 (NDX) higher. Energy issues were a help to the S&P 500 (SPX).By the final bell the major averages were mixed, after a sell-off in the last 2 hours. Volume was higher, as Friday was a Russell rebalance. At the close, the Dow Jones Industrial Average (DJIA) was down 2.5 points, the SPX inched up 3.8 points, and the NDX gained 0.4%. Breadth was positive, 2 to 1, on above average volume, which was a result of the Russell rebalance.

RSI’s were little changed with the DJIA continuing to lead at 62.7. The SPX is at 58.7 and the NDX at 56.8.

For the week, the DJIA added 10 points, the SPX gaining just 5 points, and the NDX moving up 2.1%. The VIX fell 4.3% on Friday to 10.02. It fell 3.4% for the week. This week we get more Housing Data, Consume Confidence, GDP and Chicago PMI. Look for investors to also monitor the status of proposed Health bill.

Long term, the upside bias continues, with the DJIA and SPX making new highs early in week. They both slid back somewhat in the latter part of the week. The NDX remains off its highs, but attempted to turn-around last week. All three major indices remain above long term 200 day moving average: DJIA- 19895, SPX- 2286, NDX-5194.

Short term, the bias also remains to the upside. The averages are comfortably above 50% retracement levels. Near term, the NDX and SPX saw their MACD fall below signal. This brings some caution near term, however, all three major indices remain comfortably above critical near term support of: DJIA-20553, SPX-2352, NDX-5568. 50D-SMA’s have been providing good near term support, and the NDX has remained above its 50-day for a record number of straight days.

Europe is up in early trade Monday, and U.S. Futures are moderately higher in the premarket. In terms of major economic reports out today, we’ll get Durable Goods at 8:30am and the Dallas FED Survey at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.48 (+0.22%) in premarket trading Monday. Year-to-date, DIA has gained 8.22%, versus a 8.77% 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 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.