The Dow Jones Industrial Average Remains Below An Important Technical Level

Market technician Dave Chojnacki of Street One Financial examines Thursday’s dull market action, which saw the major indexes go sideways in a tight range, updates key technical levels, and previews the final day of the trading week.

Sideways, Sideways

Slightly better than expected Initial Claims Numbers Thursday morning did little to help equities yesterday at the open. While Facebook (FB) put up decent numbers, investors were prepared to sell the news. This left equities slightly lower at the open and looking for direction.

The major averages traded in a very narrow and choppy range through the morning hours. Several attempts to move higher in the afternoon failed, and the averages lumbered into the close little changed and mixed. At the close, the Dow Jones (DJIA) slipped 6 points, the S&P 500 (SPX) inched up 1.3 points, and the Nasdaq 100 (NDX) fell 4.9 points. Breadth was slightly negative, 1.2 to 1, on below average volume.

Technicals Dull, Dow Remains Below 20-Day Moving Average

ROC(10)’s advanced for the DJIA and SPX and declined for the NDX. All three remain in positive territory. RSI’s hardly changed and the NDX remains the strongest at 67.2. The DJIA and SPX remain in the 50’s. The DJIA and SPX MACD continue below signal. The NDX MACD remains above signal.

The ARMS index ended the day at 0.99, a neutral reading. Yesterday’s session was about as dull as they get. The major indices traded in a narrow but choppy range, with little change. The SPX traded in just a 12 point range the entire session. Even headline earnings news, regarding Facebook, couldn’t shake the market out of its doldrums. The DJIA , which fell a few points, remained below its 20D-SMA-of 19905.

The NDX continues to be the strongest index near term. It continues well above its 20D-SMA of 5079 and is closed just 21 points below its recent closing high of 5168. The SPX continues to find support near its 20D-SMA(2276) and closed just 4 points above. Amazon (AMZN) missed on the top line and traders beat it down after hours, with the stock plunging 4.5% in late trading.

The VIX added 1% yesterday to 11.93. Near term support for the NDX is at 5125 and 5100. Near term resistance is at 5150, 5168, 5172 and 5188. Near term support for the SPX is at 2276, 2275 and 2250. Near term resistance is at 2288 and 2300.

Friday Rebound Brewing?

Europe is moderately higher in early trade this morning, while U.S. Futures are pointing higher in the premarket. As far as major economic data on tap today, we’ll see the Employment Report at 8:30am, Factory Orders at 10:00am, and ISM Services at 10:00am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.57 (+0.29%) in premarket trading Friday. Year-to-date, DIA has gained 0.56%, versus a 1.90% 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 #6 of 77 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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