The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA), the tracking exchange traded fund for the Dow Jones Industrial Average, has started to bounce back after sliding to start 2016 and while the fund’s charts are not perfect, near-term technicals are encouraging.
More aggressive traders who believe in a rebound on the low levels can utilize leveraged ETF options to capture a potential bounce. For instance, the ProShares Ultra Dow30 (NYSEArca: DDM) takes the 2x or 200% daily performance of the Dow, and the ProShares UltraPro Dow30 (NYSEArca: UDOW) takes the 3x or 300% daily performance of the Dow.
Additionally, investors may utilize the mega-cap ETFs to better control a stock portfolio’s market exposure or for short-term tactical plays. While mega-caps may show slower growth, the asset category also come with lower volatility.
DIA weekly chart “is negative, but will shift to positive given a close on Friday above its key weekly moving average of $164.63, but if the close is below its 200-week simple moving average of $158.15, the outcome is negative. The weekly momentum reading ended last week at 31.09 down slightly from 31.44 on Feb. 12,” according to TheStreet.com.
Good news for DIA is also likely to benefit the Guggenheim Dow Jones Industrial Average Dividend ETF (NYSEArca: DJD). DJD, which debuted last year, weighs the 30 Dow stocks by yield, which works because all 30 current members are dividend payers.
“Investors looking to buy Diamonds should enter a good till canceled limit order to buy this ETF if it drops to $161.40, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should enter a GTC limit order to sell this ETF if it rises to $177.66, which is a key level on technical charts until the end of March. The downside risk is to $145.61 for the remainder of 2016,” adds TheStreet.com.
Top holdings in DIA, which is price-weighted, include Goldman Sachs (NYSE: GS), International Business Machines (NYSE: IBM) and Visa (NYSE: VIA).
SPDR Dow Jones Industrial Average ETF
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.