Where Is The Dow Jones Industrial Average Heading Next?

Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with a recap of the recent market action and updates the important technical indicators for the major U.S. averages, which continue to struggle to reclaim the all-time highs set back in January.

With no major economic reports to move the markets, equities barely moved on Friday. The trading was flat and range bound for the entire session. The S&P 500 (SPX) traded in a very narrow 10 point range on the day.

Semi’s, which have been strong recently, pulled back on Friday, as investors were taking money off the table. The iShares Russell 2000 (NYSE:IWM) ETF continued to make new highs, as small caps continued to shine. Techs continued their weakness, causing the NASDAQ 100 (NDX) to be the biggest loser on the day. The major indices ended the day little changed and mixed.

At the close, the Dow Jones Industrial Average (DJIA) inched up 1.1 point, SPX gave up 7.2 points, and the NDX fell 0.5%. Breadth was slightly positive, on below average volume. ROC(10)’s declined in the session, however, all three major indices remained in positive territory.

RSI’s moved a little lower, with the SPX now the strongest at 56.4. The DJIA is now at 55.9 and the NDX at 55.3. All three major averages continue with their MACD above signal. The ARMS index ended the day at 1.66, a fairly bearish reading at the close.

The major averages hit their high for the week on Monday, and then spent the remainder of the week slightly lower in a narrow range. For the week, the DJIA was down 0.4%, the NDX fell 1.2%, and the SPX gave up 0.5%. The DJIA and SPX continue to remain below their 50% retrace levels of 25074 and 2726, respectively. The NDX holds above its 50% retrace level of 6760.

The averages barely changed the last four days of last week. The major averages have traded in a narrow and choppy range since the beginning of February, bouncing off their 200D-SMA’s several times. They have been unable to breakout with any strength to test their January highs.

The DJIA closed at 24715, trading as high as 24774 in the session. It continues well above its 50D-SMA of 24417. The SPX closed at 2712, continuing below its 50% retrace level. It continues above its 20D-SMA of 2680 and 50D-SMA of 2677. The NDX ended Friday at 6866. It continues well above its 20D-SMA of 6765. The VIX finished down 0.01% to 13.42. For the week, the VIX was up 6%.

Near term support for the NDX is at 6800 and 6765. Near term resistance is at 6900 and 7000. Near term support for the SPX is at 2700 and 2680. Near term critical resistance is at 2726 and 2750. This week, we get New Home Sales, FOMC Minutes and Durable Goods Orders.

Europe is higher in early trade Monday, while U.S. Futures are significantly higher in the premarket. There are no major economic reports on tap for today.

The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $2.32 (+0.94%) in premarket trading Monday. Year-to-date, DIA has declined -0.15%, versus a 1.68% 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 #3 of 81 ETFs in the Large Cap Value ETFs category.