Will The Dow Jones Industrial Average Continue To Underperform Other Indexes?

Market technician Dave Chojnacki of Street One Financial examines Wednesday’s ho-hum market performance, updates important technical levels to focus on, and points out the factors likely to influence the markets today.

On little news, equities moved lower at the open on Wednesday. The major averages went different directions as the day progressed, however, as Financials moved lower and Utilities moved higher.

After hitting their lows early in the session, the major indices reversed and moved higher through the remainder of the session. By the final bell, the Dow Jones Industrial Average (DJIA) ended slightly lower and the Nasdaq 100 (NDX) and S&P 500 (SPX) gained somewhat. It was another session with little change and little conviction.

At the close, the DJIA gave up 35.9 points, the SPX inched up 1.59 points, and the NDX moved up 10.7 points. Breadth was slightly positive, 1.3 to 1, on below average volume. ROC(10)’s declined in the session, with the DJIA crossing into negative territory. The SPX and NDX remained in positive territory.

RSI’s were little changed, with the NDX remaining the strongest at 72.6, and slightly overbought. The DJIA and SPX remain near 60. The DJIA and SPX MACD continue below signal. The NDX MACD remains above signal.

The ARMS index ended the day at 1.00, an absolute neutral reading. The NDX managed to reverse the early weakness and end slightly higher on the day, moving it into new record highs. It closed at 5196 and hit an intraday high of 5201. It also continues comfortably above its 20D-SMA of 5113.

The DJIA was the only major index which registered a small loss, but remains within striking distance of its recent highs. It continued above its 20D-SMA of 19938. The SPX closed at 2294, 4 points below its closing high of 2298. It is just 13 points above its 20D-SMA of 2281. Its 50D-SMA is at 2260, with the moving averages converging from all the sideways action.

The VIX finished up 1.4 % to 11.45. Volatility continues to be extremely low, despite a whole lot of political uncertainty. Near term support for the NDX is at 5188 and 5175. Near term resistance is at 5200 and 5225. Near term support for the SPX is at 2288 and 2281. Near term resistance is at 2298 and 2300.

Europe is moderately higher in early trade, while U.S. Futures are pointing slightly higher pre-market.

In terms of major economic data on tap for today, we’ll see Initial/Continuing Jobless Claims at 8:30am, Wholesale Inventories at 10:00am, and Natural Gas Inventories at 10:30am.

A slew of big-name companies reported earnings this morning, including Twitter, CVS, Coca-Cola, Yum! Brands, and many more. We’ll be watching those stocks closely today to see how they influence the major averages as well.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.34 (+0.17%) in premarket trading Thursday. Year-to-date, DIA has gained 1.52%, versus a 2.55% 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 76 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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