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Dow Theory Confirmed As Transports Join Industrials In Historic Rally

Market technician Dave Chojnacki of Street One Financial provides a technical update on the major U.S. stock market averages, after yesterday’s mega-rally based mainly on President Trump’s commentary.

Economic reports yesterday morning were mixed at best, but equities gapped to the upside at the open on a strong speech by President Trump the night before. The President reassured investors with his words and the major indices, which moved sideways in the last few sessions, took off to the upside.

Futures were strong before the open, and equities didn’t disappoint moving strongly higher in the morning hours. Equities never looked back, and gained steadily throughout the session.

All three major indices recorded new highs by the final bell, with the DJIA crossing the 21000 mark. At the close, the DJIA was up 1.4%, the SPX rose 1.3%, and the NDX gained 1.1%. Breadth was decidedly positive, 2 to 1, on heavy volume.

ROC(10)’s advanced and remain in positive territory. RSI’s moved up in the session, with the DJIA back in the lead at 85.4. All three remain in near term overbought territory.

The NDX MACD moved back above signal, joining the other two major averages. The ARMS index ended the day at 0.61, a bullish level.

After 5 sessions of moving sideways, the major indices broke-out to the upside and new highs. This time the volume was strong, to lend conviction to the move. We also had the DJT (Dow Transports) close at a new high of 9593. This is Dow Theory confirmation with the Transports confirming the Industrials.

The IWM (small-caps) also closed at a new high (140.36) indicating the breadth of the move. The SPX hit the 2400 level for the first time ever, and ended just a few points below. It moved above the near term target of 2382 and sets up the new target of 2407.

The NDX closed above its target of 5362, with the new target at 5422. Near term support for the NDX is at 5375 and 5362. Near term resistance is at 5400 and 5422. Near term support for the SPX is at 2382 and 2375. Near term resistance is at 2400 and 2407.

Europe is lower in early trade, while U.S. Futures are pointing slightly lower in the premarket. As far as major economic reports on tap today, we’ll see Challenger Job Cuts at 7:30am, Initial/Continuing Jobless Claims at 8:30am, and Natural Gas Inventories at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.13 (+0.06%) in premarket trading Thursday. Year-to-date, DIA has gained 6.87%, versus a 7.19% 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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