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Can The Dow Build Upon A String Of Record Highs?

Wednesday, November 16, 2016 6:49
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Technical analyst Dave Chojnacki recaps Monday’s recovery in tech-focused stocks, and provides investors and traders a preview of what to expect today as major indexes continues to digest Trump’s election ramifications.

Tuesday Market Recap

The markets opened higher yesterday morning,  strengthened by a better than expected Retail Sales number.  This time, we saw money flowing into the big Techs, as investors took advantage of the recent oversold conditions.  The Nasdaq 100 index (NDX) had the strongest gain on the day because of this inflow to Technology stocks.  The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) ended near their highs of the day.

Notably, the DJIA made a new closing high of 18,868. At the close, the DJIA was up 0.29%, the SPX added 0.75%, and the NDX moved up 1.3%.

Breadth was decidedly positive, 2.6 to 1, on slightly above average volume. 10-Day Rates of Change (ROC(10)’s) advanced, with the DJIA and SPX remaining in positive territory and the NDX continuing in negative territory. Relative Strength Indicators (RSI’s) moved higher, with the DJIA at 73.8 sitting in overbought territory. In contrast, the SPX and NDX remain in bullish territory.

The DJIA and SPX remain with their MACD above signal, while the NDX continues below.  The ARMS index ended the day at 1.07, a neutral reading.

The breadth in yesterday’s session was encouraging, in that the gains were more widespread and not just in a few select Dow stocks.  As noted earlier, the NDX was the strongest index in the session, however, it was the DJIA which made a new closing high.  It traded as high as 18,925 in the session, 9 points below the previous session’s intra-day high.

The Dow developed a ‘Hanging Man’ candlestick in the session, possibly indicating a near term top. While the NDX had a good day, it still remains below its 20-Day Moving Average (20D-SMA) of 4,791 and its 50D-SMA of 4,812. It continues above the near term critical support level of 4,647.  The SPX closed just 10 points below its all-time closing high of 2,190. Meanwhile, the SPX appears to have the strength to test this level.

The VIX lost 7.6% to finish at 13.37 as Trump fears continue to dissipate. Near term support for the NDX is at 4,750 and 4,725, while near term resistance is at 4,775 and 4,791. Near term support for the SPX is at 2,175 and 2,162. Near term resistance is at 2,190, 2,193 and 2,200.

What To Watch Today

Europe is lower in early trade Wednesday, and U.S. Futures are pointing slightly lower in the premarket.

In terms of economic data on tap today, we’ve got the Producer Price Index (PPI) at 8:30am, Industrial Production/Capacity Utilization at 9:15am, NAHB Housing Index numbers at 10:00am, and Crude Inventories at 10:30am.

This morning’s key earnings reports included a big beat for Target and a very weak report from Lowe’s. After hours today, we’ll see reports from Limited Brands and Cisco.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.51 (-0.27%) to $188.83 per share in premarket trading Wednesday. Year-to-date, the only ETF tied to the DJIA has gained 8.82%.


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./div>

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