Dow Jones Industrial Average Sputters Ahead Of Crucial Healthcare Vote

Market technician Dave Chojnacki of Street One Financial wraps up an eventful trading week with a final look at the important technical levels that could influence the major U.S. averages, as the mainstream media focuses on Washington’s pivotal Healthcare plan vote.

The market opened lower Thursday amongst a mix of economic reports. After better than expected New Home Sales data, equities seemed to be rejuvenated and headed to the upside. This time, the NDX lagged the other major indices, however.

The averages traded higher until early noon, when they again reversed and began heading lower. Word began leaking that the Healthcare Bill vote may be delayed, and this had an impact on equities. By the end of the session, the major indices were little changed and all closed slightly lower.

At the close, the DJIA was down 4.7 points, the SPX slipped 2.4 points, and the NDX fell 12.4 points. Breadth was positive, 2 to 1, on above average volume. ROC(10)’s declined, with the NDX crossing back into negative territory. RSI’s were little changed, with the NDX moving to 63.7, the strongest of the three major averages. The DJIA and SPX remain in the mid 40’s. All three major averages remain with their MACD below signal. The ARMS index ended the day at 1.65, fairly bearish.

Thursday was another day where the major indices traded in a narrow range, however, we did see volume pick up to above average again. Breadth was positive, by a fairly good margin, despite the slight losses in the major indices. We note that Small Caps (IWM) were up slightly to 134.78, a 0.58% gain, which may explain the positive breadth.

All three major averages remain below their 20D-SMA’s: DJIA-20875, SPX-2370, and NDX-5372. The SPX closed right near its lower Bollinger Band of 2344. The DJIA also closed just a few points above its Bollinger Band low of 20647.

The VIX continued its recent move higher, ending at 13.12, up 2.4%. Gold (GLD), in contrast, ended its recent move higher, closing down 0.16 points to 118.67.

Near term support for the NDX is at 5350 and 5325. Near term resistance is at 5372, 5375 and 5400. Near term support for the SPX is at 2329, 2325 and 2312. Near term resistance is at 2350 and 2370.

Europe is lower in early trade Friday morning, with U.S. Futures mixed in the premarket. The only piece of major economic data on tap today is Durable Goods Orders at 8:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Friday. Year-to-date, DIA has gained 4.46%, versus a 4.70% 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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