Manchester Terror Attack Fails To Affect Dow Jones Industrial Average (DJIA)


Conventional wisdom would dictate that a major global terrorist attack would have some sort of negative short-term effect on stocks, but that simply isn’t the case anymore. Market technician Dave Chojnacki of Street One Financial recaps Tuesday’s market action and updates the key technical levels to watch for the major U.S. averages.

One of the most horrific terror attacks in U.K. history could not deter equities from opening higher, as the teflon market continues. Housing Sales data also came in lower than expected on Tuesday, but investors still stepped up to buy stocks.The major indices moved in a narrow range on little volume, but rose steadily during the session. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) were slightly stronger than the Nasdaq 100 (NDX) in the session.

The averages ended the day slightly higher. At the close, the DJIA added 48 points, the SPX inched up 4.4 points, and the NDX moved up just 3.9 points. Breadth was positive, 1.5 to 1, on weak volume.

ROC(10)’s were mixed, with the DJIA and SPX advancing and the NDX declining. The SPX crossed back into positive territory, joining the NDX. RSI’s moved slightly higher, with the NDX the strongest at 64.1. The DJIA and SPX are in the mid 50’s.

All three major averages remain with their MACD below signal. The ARMS index ended the day at 1.03, a neutral reading.

The major indices rose for the fourth straight session on Tuesday, after last Wednesday’s meltdown. While the gains were small and the volume light, equities continue to shine. The SPX closed a gap at 2396, but met resistance at 2400 level and pulled back abruptly. Last week’s closing high was 2402 and intra-day high of 2405. It continues to hold above its 20D-SMA of 2389.

The NDX was the weakest performer in the session, but has the strongest near term technicals. It remains comfortably above its 20D-SMA of 5646. It closed the session at 5703, just 21 points below last week’s high of 5724.

The DJIA moved back above its 20D-SMA of 20914, closing at 20937.

The VIX finished down 1.9% to 10.72, remaining extremely low.

Near term support for the NDX is at 5675 and 5646. Near term resistance is at 5724 and 5750. Near term support for the SPX is at 2389 and 2375. Near term resistance is at 2402, 2405, and 2412.

Europe is mixed in early trade, but U.S. Futures are pointing slightly higher in the premarket on Wednesday. On the economic data front, today we’ll see FHFA Housing Index numbers at 9:00am, Existing Home Sales at 10:00am, Crude Inventories at 10:30am, and 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 5.88%, versus a 7.39% 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.

This post appeared first at  May 24, 2017