DIA Chart – Close to Resistance Again

I charted the Dow Jones ETF (NYSE: DIA) this morning within the first half hour of the market opening when it was trading at $103.13.  The first glaring line I drew was the trend line of higher highs.  DIA bumped up against it yesterday and then dropped.  Although it held onto a gain for the day, the trend line showed its strength.  This remains the line to watch for now.  I expect DIA to head back down closer to its lower trend line of higher lows.  The reason to keep an eye on the top line though is that if DIA can break above it and stays for two days we could see another leg up in the rally.  This morning isn’t giving any indication that’s on the agenda, but things can change at any time.

The 10 day moving average had a bullish crossover above the 20 day moving average yesterday which typically signals coming strength.  That makes the trend line mentioned above interesting since it disagrees with its own strength.  I’m planning to wait to add DIA to my holdings on a dip closer to 100.  That’ll put it near the current points of the 10 and 20 day moving averages.  Another 5% dip for DIA should be an ideal entry point for multiple reasons.  That’s close to the trend line of higher lows, the powerful 50 day moving average and would be consistent with how far previous mini-corrections have taken DIA before it finds its legs again.