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The Dow Is Entering Overbought Territory

Monday, November 14, 2016 6:25
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(Before It's News)

Technical analyst Dave Chojnacki recaps Friday’s mixed market action and gives investors and traders a preview of what to expect as the new trading week kicks off.

Market Recap

We had a mixed Market on Friday, as the Trump rally in Industrial and Financial sectors continued. The S&P hit a low near mid-day and then came back to close little changed by the end of the day. The DJIA and NDX ended slightly higher, as volume came down from the two previous sessions.

At the close on Friday, the Dow Jones Industrial Average (DJIA) added 39.7 points, the S&P 500 (SPX) lost 3 points, and the Nasdaq (NDX) inched up 4.9 points. Relative Strength Indicators (RSI’s) were little changed on Friday, with the DJIA slightly overbought in the near term at 72.2. The DJIA is up 2.8% since the election, as we continue to see the sector rotation.

10-Date Rate of Changes (ROC(10’s)) advanced on Friday with the DJIA and SPX remaining in positive territory, while losses in Techs kept the NDX in negative territory.  The ARMS index ended at 1.06, a neutral reading.

For the week, the DJIA was up 5.3%, the SPX added 3.7%, and the NDX gaining 1.9%.  The VIX was down 3.8% on Friday to 14.17, and for the week, the VIX gave up 37%.

We get Retail and Housing Numbers this week, which could provide some insight about where the economy is heading into 2017.

Trading Trends

Longer term, the market continued its upside bias with the DJIA moving to new highs.  All three major indices are now above their 20- and 50-week moving averages.  The NDX and SPX are also comfortably above their 200D-SMA’s of 4550 and 2089, respectively.

Short term, the bias has moved back to the upside. The SPX is now comfortably above its 50% retrace level of 2095, and the NDX is comfortably above its 50% retrace level of 4555.  

Near term, the DJIA is nearing overbought levels and we would expect some consolidation before moving higher.  The NDX and SPX have more room to the upside this week.

Europe is up slightly in early trade on Monday, while U.S. futures are mixed in the premarket.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.41 (+0.22%) to $188.88 per share in premarket trading Monday. Year-to-date, the only ETF tied to the DJIA has gained 8.32%.


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>

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

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