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Near-Term Pressure On Dow Jones Industrial Average Continues

Market technician Dave Chojnacki of Street One Financial updates the important technical levels to key on for the major U.S. averages, as investors await the all-important healthcare bill vote result this evening.

Equities opened flat on Wednesday, as the major indices were digesting the big losses from the prior session. Existing Home Sales reported lower than expected, and this kept some pressure on equities throughout the day.

Traders were looking for bargains in Tech stocks, and this helped push the NDX to a moderate gain, as equities finished mixed on the day. It was a decent session for the major averages, as there was no big follow through to the downside. Investors continue to keep their eyes on tonight’s vote on the Healthcare bill, with a potential volatility spike ahead if the bill fails to pass.

At the close on Wednesday, the DJIA was off 6.7 points, the SPX added 4.4 points, and the NDX gained 0.66%. Breadth was slightly positive, 1.1 to 1, on above average volume. ROC(10)’s advanced, with the NDX crossing back into positive territory. RSI’s were little changed, with the major indices remaining in the 40’s and 50’s.

All three major averages remain with their MACD below signal. The ARMS index ended the day at 1.18, just slightly bearish.

The major averages found some support in yesterday’s session, as investors continue to watch Washington for signals on Healthcare and Tax cuts. All three major averages continued below their 20D-moving averages, keeping pressure on equities near term.

The DJIA and SPX traded near to their lower Bollinger band in the session of 20675 and 2347, respectively. We are also watching the 50D-SMA as another key support level: DJIA-20420, SPX-2327, NDX-5246. Small Caps (IWM) were little changed in the session, as equities across the board attempted to gain footing.

Gold (GLD) continued its climb higher, as the U.S. Dollar (UUP) continues its move to the downside. The VIX finished up 2.7% to 12.81.

Near term support for the NDX is at 5350 and 5325. Near term resistance is at 5371, 5375 and 5400. Near term support for the SPX is at 2327, 2325 and 2312. Near term resistance is at 2350 and 2370.

Europe is mixed in early trade, while U.S. Futures are pointing slightly higher pre-market. In terms of major economic reports out today, we’ll see Initial/Continuing Job Claims at 8:30am, New Home Sales at 10:00am, and Natural Gas Inventories at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Thursday. Year-to-date, DIA has gained 4.51%, versus a 4.81% 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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