The Dow Jones Industrial Average Climbs Within Striking Distance Of All-Time Highs

U.S. equities surged for a second straight day on Tuesday, amid President Trump’s promises for corporate tax reform. Technical analyst Dave Chojnacki of Street One Financial examines the big bounce and updates the critical technical levels to focus on as the markets enter potentially overbought territory.

Good earnings from Dow components, proposed Corporate Taxes at 15%, and decent Housing data all propelled equities to continue their rally yesterday. Stocks moved up out of the gate and never looked back.

The Major indices held their strong gains into the closing bell. Consumer Discretionary, I.T., and Financials all made strong gains during the session.

The major averages ended with significant gains for the second straight session, with the Nasdaq 100 (NDX) making new highs once again. The Nasdaq Composite also closed over 6000 for the first time.

At the close, the Dow Jones Industrial Average (DJIA) added 1.1%, the S&P 500 (SPX) gained 0.61%, and the NDX was up 0.73%. Breadth was decidedly positive, 2 to 1, on above average volume. ROC(10)’s advanced and all three major indices remain in positive territory. RSI’s continued higher with the NDX beginning to become slightly overbought at 73.6. The DJIA and SPX are now in the low 60’s.

All three major averages remain with their MACD above signal. The ARMS index ended the day at 0.91, just a slightly bullish reading.

The NDX closed at 5548 and traded as high as 5557 in the session, moving into new high territory. It is above the top of its Bollinger Band™ of 5509, and is a little extended near term. Critical near term support is now at 5353.

The DJIA was the best performer in the session, moving above its Bollinger Band top of 20878. It closed at 20996, and is within striking distance of its early March closing high of 21115. The SPX closed above its BB top of 2380, and is less than 1% from its closing high of 2400. Critical near term support is 2329.

IWM (iShares Russell 2000) hit a new intraday high of 140.88, but was unable to close above its previous high of 140.36. It closed at 140.27. The VIX finished at 10.36, down 0.74%.

Near term support for the NDX is at 5525 and 5500. Near term resistance is at 5550 and 5557. Near term support for the SPX is at 2375 and 2362. Near term resistance is at 2388 and 2400.

Europe is lower in early trade, and U.S. Futures are mixed. The only major economic report on tap today is Crude Inventories at 10:30am, with several earnings reports from major companies dominating the news flow.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.10 (+0.05%) in premarket trading Wednesday. Year-to-date, DIA has gained 6.16%, versus a 6.72% 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 #4 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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