Dow Jones Industrial Average Largely Immune From Tech Sell-Off

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Market technician Dave Chojnacki of Street One Financial examines the post-holiday market environment with a recap of Monday’s abbreviated action and an update of the important technical levels for the major U.S. averages.

Decent economic numbers helped push equities higher at the open on Monday. The major indices quickly took different paths, as once again, Tech stocks were being sold off. Meanwhile, the Dow Jones Industrial Average (DJIA) hit a new intraday high of 21562 in the session before it too sold off. It did close with a moderate gain, however.Monday was an abbreviated session because of the coming holiday, and by the end of the session the major averages were mixed. The DJIA ended moderately higher, the S&P 500 (SPX) inched up, and the Nasdaq 100 (NDX) ended with a moderate loss. At the close, the DJIA was up 0.61%, the SPX added 5.6 points, and the NDX gave up 0.88%.

Breadth was decidedly positive, 2.6 to 1, on half-day volume. ROC(10)’s declined across the board, with all three major indices remaining in negative territory. RSI’s were mixed with the NDX moving lower and into the 30’s, at 39.3. The DJIA remains the strongest at 60.7, with the SPX at 51.7.

All three major indices remain with their MACD below signal. The ARMS index ended the day at 0.98, a neutral reading.

The major indices could not hold on to big early gains on Monday, however, the DJIA and SPX did end in the black. As noted earlier, the DJIA hit a new intra-day high before pulling back. Energy, Financial and Healthcare sectors helped push the Dow Jones Industrials higher. It traded just near its top of the Bollinger Band® at the high of the session, and remains comfortably above its 20D-SMA of 21346.

The NDX ended the session just 1 point above its lower Bollinger Band of 5595. It is far below its 50D-SMA of 5706. Meanwhile, The SPX closed just below its 20D-SMA of 2433, but remains above its 50D-SMA of 2411. The VIX was little changed, up 0.04 of a point, to 11.22.

Near term support for the NDX is at 5575 and 5568. Near term resistance is at 5600 and 5650.. Near term support for the SPX is at 2425 and 2411. Near term resistance is at 2433 and 2450.

Europe is mixed in early trade Wednesday, while U.S. Futures are mixed in the premarket, with the NDX once again pointing lower. In terms of economic data on tap today, we’ll see Factory Orders at 10:00am and the FOMC Minutes at 2:00pm.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Wednesday. Year-to-date, DIA has gained 8.60%, versus a 8.36% 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.

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