Third 'Dow' In A Row

Includes: DIA, IWM, QQQ, SPY
by: Wall Street Sector Selector

By John Nyaradi

The Dow reaches another high, for a third "Dow" in a row

The Dow Jones Industrial Average has reached another all time high, for the third "Dow" in a row. Yesterday’s magic number for the Dow was 14,329 with a .23% increase, likely spurred by good unemployment claims data released yesterday. The SPDR S&P 500 ETF (NYSEARCA:SPY) rose .18%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) added .26%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) added .48%.

So, the question still remains: will the bulls keep on charging past yesterday’s third "Dow" in a row or are we looking at a serious correction in the near future? By a daily technical standpoint, the bulls might still have some steam, as the daily MACD is at a very high 21.211, despite the fact that the Index’ RSI has reached nearly overbought levels of 68.95.

From a fundamental perspective, I would suggest that the continued easing by our beloved chairman and positive economic indicators have been a great help (albeit Congressional bickering), but until the S&P 500 performs the same way in terms of new records, Wall Street Sector Selector still remains in Yellow Flag Mode. Considering that the S&P 500 is now just a mere 2% away from an all time high, a full fledged bull market could be in the cards for all of us soon. But, just because we had a third "Dow" in a row does not yet rule out the possibility of a serious correction soon.

At any rate, yesterday’s unemployment data was better than most, as unemployment claims dropped to 340,000 for the week ending March 2nd compared to 347,000 claims the previous week. Today’s all important non-Farm Payrolls report will also shed some more light on this issue. Why Unemployment Matters To Stock Prices.

Also, Super Mario Draghi reiterated today that the ECB’s Central Bank would continue to keep interest rates at a near zero pulse, sparking a new upswing for European stocks. Surprise, surprise. European Stocks Resume Their Climb.

Bottom Line: The third “Dow” in a row is almost getting boring, likely because we are anticipating what will happen next. Red flag or Green flag modes are the only options from here for Wall Street Sector Selector, which is why we remain in yellow flag mode for the current time being.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.