Dow Jones Industrial Average Stumbles As Trump’s Tax Plan Details Emerge

The U.S. markets took a breather on Wednesday, following two massive up days drive by tax reform hopes. Market Technician Dave Chojnacki of Street One Financial examines the sideways action and updates the crucial technical levels to focus on as the markets get set to wrap up the final trading week in April.

With little economic news to kick the market off on Wednesday, investors looked to earnings and awaited details of President Trump’s new Tax Plan. Prices were mixed at the open, but then moved higher through the morning hours.

The Nasdaq 100 (NDX), which has been the best performer as of late, traded at a new intraday high right near the open, but then pulled back and traded sideways into the PM hours. After the Tax Plan announcement, equities decided to sell the news and fell into the close.

By the final bell, the major averages were down just slightly to the downside. At the close, the Dow Jones Industrial Average (DJIA) fell 21 points, the S&P 500 (SPX) inched down 1.1 points, and the NDX slipped 7.1 points. Breadth was slightly positive, 1.3 to 1, on average volume.

ROC(10)’s were mixed, with the DJIA declining, and the SPX and NDX advancing. All three remain in positive territory. RSI’s fell back, with the NDX continuing as the strongest at 71.8. The SPX and DJIA remain in the lower 60’s. All three major averages remain with their MACD above signal. The ARMS index ended the day at 1.22, just a slightly bearish reading.

The major indices decided to take a breather yesterday, after getting off to a good start. All three major indices closed just slightly above their Bollinger Band® tops of: DJIA-20932, SPX-2385, NDX-5529. They also developed ‘Inverted Hammer’ candlesticks (a topping formation).

The NDX hit a new intraday high of 5563 in the session, but could not hold its gain into the final bell and establish a new closing high. The SPX got within two points of its all-time closing high of 2400, before pulling back and closing at 2387. IWM (iShares Russell 2000) continued its move higher to a new closing high of 140.99. The VIX added 0.8% to 10.85.

Near term support for the NDX is at 5525 and 5500. Near term resistance is at 5550 and 5563. Near term support for the SPX is at 2375 and 2362. Near term resistance is at 2388 and 2400.

Europe is lower in moderately lower early trade, and US Futures are slightly higher in the premarket. Along with a slew of earnings reports out today, we’ll also see Durable Goods data and Initial/Continuing Jobless Claims at 8:30am, Pending Home Sales at 10:00am, and Natural Gas Inventories at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.17 (+0.08%) in premarket trading Thursday. Year-to-date, DIA has gained 6.06%, versus a 6.65% 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 #4 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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