Dow Jones Industrial Average (.DJI) notches fifth straight gain as investors eye potential change in leadership

Dow Jones Industrial Average (.DJI) notches fifth straight gain as investors eye potential change in leadership

Dow Jones Industrial Average (.DJI) notches fifth straight gain as investors eye potential change in leadership

U.S. stocks closed at session highs Tuesday as a rally in energy, industrials and materials stocks overshadowed a selloff in momentum-driven technology shares, helping the Dow extend its win streak to five sessions and the S&P 500 index avoid consecutive declines after trading in the red for most of the session.

Apple Inc. AAPL, +1.18% was in the spotlight as it announced new model iPhones and other products at its annual launch event Tuesday afternoon.

How did the major benchmarks fare?

The Dow Jones Industrial Average DJIA, +0.28% rose 73.92 points, or 0.3%, to 26,909.43, while the S&P 500 index SPX, +0.03% added 0.96 point, or less than 0.1%, to 2,979.39. The Nasdaq Composite index COMP, -0.04% retreated 3.28 points, or less than 0.1%, to 8,084.15

At session lows, the Dow fell 118.46 points, or 0.4%, the S&P 500 lost 21.42 points, or 0.7% and the Nasdaq was down 85.75 points, or 1.1%.

What drove the market?

Investors eyed a potential rotation in market leadership from defensive names and fast-growing tech stocks into cyclical sectors, including energy, industrials and materials, all of which have posted gains Tuesday, in contrast with the S&P 500.

“The big story is the continuing rotation that we saw begin a couple days ago,” Willie Delwiche, market strategist with R.W. Baird told MarketWatch. “If we can actually move away from narrow, defensive leadership into cyclical and small-cap leadership, that would be a healthy development for the market.”

Defensive sectors, including real estate, utilities and consumer staples weighed on the major indexes Tuesday while small capitalization stocks, as measured by the Russell 2000 RUT, +1.23%,  posted gains. The share of stocks advancing versus declining on the New York Stock Exchange came in at nearly 3-to-2, a potentially bullish signal going forward, Delwiche said.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 27,699.34.

The projected lower bound is: 26,131.90.

The projected closing price is: 26,915.62.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with DJ INDU AVERG), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.7888. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 59.65. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 24 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 13 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 73.920 at 26,909.430. Volume was 19% above average (neutral) and Bollinger Bands were 9% wider than normal.

Open     High      Low     Close     Volume___
26,805.83026,909.43026,717.05126,909.430 322,336,672
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 26,432.36 26,579.74 25,668.45
Volatility: 14 19 20
Volume: 238,963,808 259,915,200 301,629,600

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 4.8% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .DJI (mildly bullish). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 2 periods.

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