Technical Upside Bias Continues For The Dow Jones Industrial Average

Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a look at the important technical levels for the U.S. averages, which rebounded late last week to recover some of their recent losses.

A good Employment Report on Friday had equities gapping higher at the open. The enthusiasm didn’t last long, however, as the averages began to reverse after the first half hour.

The major indices were diverting from each other as the DJIA and SPX headed lower during the day, while the NDX managed to stay in positive territory. Once again, Energy issues were hurting the DJIA and SPX.

The averages moved higher in the PM and all managed to get into positive territory by the final bell. At the close, the DJIA added 44.7 points, the SPX was up 7.7 points, and the NDX 0.41%. Breadth was decidedly higher on Friday, on average volume. ROC(10’s) advanced and remain in positive territory. RSI’s continue between the low 60’s and low 70’s. The ARMS Index ended at a neutral 0.98.

For the week, the DJIA fell 0.4%, the SPX slipped 0.5%, and the NDX added 0.2%. The VIX was down 5.2% on Friday to 11.66, but up 6.3% for the week.

Long term, the upside bias continues as the major indices site comfortably above their 20-Week Moving Averages: DJIA-19742, NDX-5018, SPX-2259. The indices had their weakest week in some time, but remain within striking distance of their recent record highs.

Equities continue to be in the fifth wave of a rally which began on November 7th. Short term, the bias remains to the upside with the SPX and NDX above their 50% retracement levels of 2240 and 5025, respectively.

Near term, the averages had their MACD fall below signal and the DJIA and SPX closed the week lower. Despite the near term weakness, they have held their 20D-SMA’s: DJIA-20773, SPX-2361, NDX-5334.

Europe is slightly higher in early trade this morning, while U.S. Futures are pointing a bit lower. We’ll see a slew of Economic Reports this week, plus an expected Federal Reserve rate hike on Wednesday, but there’s nothing on tap today to move the markets on that front.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Monday. Year-to-date, DIA has gained 5.89%, versus a 6.33% 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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