Dow Jones Industrial Average Shrugs Off Government Shutdown

Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a look at how the federal government shutdown is affecting the markets, and updates the important technical levels to consider for the major averages, which have gotten off to an incredibly bullish start this year.

The threat of a government shutdown seemed to do very little to the markets on Friday. There was little movement in either direction, as Options were expiring at the end of the session. There was a push to the upside at the end of the day leaving the major indices higher and near their highs of the session.

The Nasdaq 100 (NDX) and S&P 500 (SPX) once again set new record highs. The Dow Jones Industrial Average (DJIA) finished slightly higher, but was unable to break to new highs. At the close, the DJIA added 53.9 points, the SPX moved up 0.44%, and the NDX gained 0.34%. Breadth was decidedly positive, 2 to 1, on above average volume. Volume was above average nearly every day last week.

RSI’s continue in overbought territory near term. MACD’s continue above signal. The major indices continued their record rally last week: DJIA up 1%, the NDX gaining 1.1%, and the SPX adding 0.8%. The VIX was up 11% for the week. It was the second week of gains for the VIX. We get GDP and Durable Goods numbers at the end of this week.

Long term, the upside bias continues. Three weeks into the new year and all three major indices continue to make new record highs. The DJT (Dow Transports) have confirmed the Industrials rally, thereby confirming the age old Dow Theory.

The major averages are well above their 150D-SMA: DJIA-22923, SPX-2547, NDX-6102. Short term, the major averages remain comfortably above their 6 month lows: DJIA-21600, SPX-2417, NDX-5750.

Near term, the averages remain technically strong and overbought. All three major indices have RSI’s near 80 and above. Critical near term support remains at: DJIA- 24708, SPX-2673, NDX-6396.

Europe is higher in early trade Monday, while U.S. Futures are pointing lower in the premarket. There are no major economic reports on tap today, but key earnings reports continue this week.

The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) fell $0.7 (-0.27%) in premarket trading Monday. Year-to-date, DIA has gained 5.32%, versus a 5.08% 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 79 ETFs in the Large Cap Value ETFs category.