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Can The Dow Jones Industrial Average Manage Another New High This Week?

Market technician Dave Chojnacki of Street One Financial kicks off the trading week with a deep look at the major U.S. indexes and updates the technical levels investors should focus on.

The market opened lower on Friday, with little economic news to give it direction. Investors continue to analyze the mix of interest rate hikes and proposed tax cuts to determine just how they impact the markets.

Last week, we saw Bond yields rise and also saw equities making new highs. The major indices stayed in negative territory for most of Friday, until the last half-hour. A last minute spike left equities just slightly in the black. At the close, the DJIA was up 2.7 points, the SPX inched up 1.2 points, and the NDX gained 10.2 points.

Breadth was slightly higher on Friday, on below average volume. ROC(10’s) were mixed, with the DJIA going lower and the NDX and SPX advancing. RSI’s remain in the lower 70’s and in slightly overbought levels. The ARMS Index ended at a slightly bullish 0.79.

For the week, the DJIA was up 0.8%, the SPX gained 0.6%, and the NDX added 0.5%. The VIX was down 7.2% on Friday, and off 4.4% for the week.

Long term, the upside bias continues with more new highs in the major indices last week. After hitting new highs mid-week, the averages were fairly flat the last few days. The major averages are comfortably above their 200D-SMA’s: DJIA-18816, SPX-2187, NDX-4812.

Equities appear to be in the fifth wave of a rally which began on November 7th. Short term, the bias remains to the upside with the SPX and NDX above their 50% retracement levels of 2240 and 5025, respectively. Near term, the averages may find some resistance near their Bollinger Band tops, which are SPX-2407 and NDX-5433. We may also see the SPX pull back to fill a gap at 2367. Near term critical support is at the 20D-SMA of SPX-2343 and NDX 5289.

Europe is moderately lower in early trade, while U.S. Futures pointing lower. This week, we’ll get Factory Orders today at 10:00am and the Employment Report at the end of the week.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.31 (-0.15%) in premarket trading Monday. Year-to-date, DIA has gained 6.28%, versus a 6.66% 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.

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