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Can The Dow Jones Industrial Average Build On Its 4.5% Q1 Gain?

Market technician Dave Chojnacki of Street One Financial kicks off a new trading week with a look back at how the major U.S. averages fared on Friday, and updates the key technical levels for investors and traders to focus on this week.

Economic reports were mixed on Friday, as equities opened lower. The indices made several attempts to recover on Friday, but the afternoon brought more selling.

The major averages fell in the session, but the losses were small. The NDX managed to lose the least in the session, and it hit a new intraday high of 5451 on the day.

The averages ended the session falling in the last hour, but kept the losses to a minimum. At the close, the DJIA was down 0.31%, the SPX gave up 0.23%, and the NDX slipped 3.5 points. Breadth was positive on Friday, 1.5 to 1, on below average volume. ROC(10’s) declined for the DJIA and the SPX, and remained the same for the NDX.

RSI’s were lower on Friday, with the NDX continuing to be the strongest at 65.5. For the week, the DJIA was up 0.3%, the SPX added 0.8%, and the NDX gained 1.3%. The NDX hit new record highs during the week. Meanwhile, the VIX gained 7.1% on Friday to finish at 12.37.

Long term, the upside bias continues, with the NDX making new record highs in the week. The DJIA and SPX lagged somewhat, but all three major averages remain comfortably above their 20WK moving averages of: DJIA-20106, NDX-5117, SPX-2294.

Short term, the bias remains to the upside as well, with the SPX and NDX above their 50% retracement levels of 2240 and 5025, respectively. For the first quarter, the NDX was up 11.7% and the SPX up 5.5%.

Near term, the NDX continues to be the strongest index. The DJIA and SPX attempted to rebuild their near term strength last week, but remained just below their 20D-SMAS’s of 20790 and 2363, respectively. They remain within 2% of their record February highs.

Europe is mixed in early trade Monday, while U.S. Futures are pointing higher premarket. Important economic data out today includes the ISM Index, Construction Spending, and Auto/Truck Sales all at 10:00am. We’ll also get the latest FOMC minutes and the Employment Report later this week.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Monday. Year-to-date, DIA has gained 4.47%, versus a 5.46% 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 74 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.

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