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Dow Looks To Build On 20K As Post-Election Rally Hits Fever Pitch

Technical analyst Dave Chojnacki of Street One Financial examines yesterday’s historic day for the markets, where the Dow finally blew through the 20K threshold, and updates the key technical levels investors should focus on.

Trump Rally Reaches Fever Pitch

The major indices gapped up at the open Wednesday, following through on the strength of the prior session. The post-election rally continues, as shares rose throughout the day. Industrials and Healthcare were the leading sectors, as investors piled into companies that would benefit from Trump’s new policies.

The major averages were up significantly in the session and ended close to their highs of the day. All three major averages registered new all-time highs. At the close, the DJIA gained 0.78%, the SPX added 0.8%, and the NDX rose 0.99%. Breadth was decidedly positive, 2 to 1, on above average volume.

Technicals Approach Overbought Levels

ROC(10)’s advanced in the session, with all three major averages in positive territory. RSI’s were higher, with the NDX at 75.3, entering into overbought levels. The DJIA and SPX ended in the mid 60’s.

MACD’s remain below signal for the DJIA and SPX and above signal for the NDX. The ARMS index ended the day at 0.76, fairly bullish. The major indices gapped up at the open and never looked back, ending with new highs.

The DJIA and SPX finally broke out of the range they have been trading in since the beginning of December. The ‘Bull Handle’ pattern lived up to its prediction, as indices broke out to new levels. All three major indices are comfortably above their 20D-SMA’s of: DJIA-19874, SPX-2267, and NDX- 5011. As would be expected, the momentum to the upside has strengthened. The Fibonacci extended near term targets are NDX- 5198 and SPX- 2348.

IWM (iShares Russell 2000) small-caps was up nearly 1% for the second straight session. It closed at 137.21, and remains just short of its December closing high of 138.31. The VIX closed with a 10 handle, at 10.81, the lowest since May of 2014.

Near term support for the NDX is at 5125 and 5100. Near term resistance is at 5175 and 5198. Near term support for the SPX is at 2288 and 2276. Near term resistance is at 2300 and 2325.

More Gains Coming?

Europe is up in early trade, while U.S. Futures are pointing slightly higher in the premarket. We’ll see a number of important economic reports released today, including Initial/Continuing Jobless Claims at 8:30am, Leading Indicators at 10:00am, New 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 1.47%, versus a 2.70% 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 #6 of 77 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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