Energy-market weakness and tech-stock strength are the big stories in the markets right now. Market technician Dave Chojnacki of Street One Financial looks at the slight divergence in the major U.S. indexes and updates the important technical levels to focus on as we hit mid-week.
After the early highs, the Dow Jones Industrial Average and S&P 500 moved lower, while the Nasdaq 100 was able to hold on to its strength. The Energy sector was weak once again, keeping the DJIA lower.
The NDX managed to hold on to enough of its early gains to finish at new highs for the third straight day. The SPX did make a new intraday high of 2403, but was unable to close at a new high.
At the close, the DJIA fell 36.5 points, the SPX slipped 2.4 points, and the NDX was up 19.2 points. Breadth was slightly negative, 1.3 to 1, on below average volume. ROC(10)s declined in the session, with the DJIA falling into negative territory. The NDX and SPX remain in positive territory.
RSI’s were mixed, with only the NDX rising to 79.6, continuing in the overbought area. All three major averages remain with their MACD above signal. The ARMS index ended the day at 0.96, a nearly neutral reading.
The NDX continues to be the star, held up by the Tech sector. Specifically, the big cap techs, such as Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL), are accounting for the majority of the gains. The NDX moved above our near term target of 5667 and sets its eyes on 5700. It is comfortably above its 20D-SMA of 5523.
The DJIA saw its 20-D cross above its 50D-SMA, by a few tenths of a point, which is at 20790. The DJIA and SPX have now moved sideways for 11 straight sessions, developing a ‘Bull Handle’ chart pattern. This would suggest we see another leg up. The SPX closed 25 points above its 20D-SMA of 2371.
SPDR Gold Shares (HK:2840) (NYSE:GLD) (SPDR Gold) fell again to 116.05, down 0.6%. The VIX was up 2% to 9.97, bouncing off its lows.
Near-term support for the NDX is at 5667 and 5650. Near-term resistance is at 5700 and 5725. Near term support for the SPX is at 2388 and 2375. Near-term resistance is at 2400, 2403, and 2412.
Europe is lower in early trade, and U.S. Futures are pointing lower in the premarket. Today on tap in terms of major economic reports, we’ll see Import/Export Prices at 8:30am, Crude Inventories at 10:30am, and the Treasury Budget at 2:00pm.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.58 (-0.28%) in premarket trading Wednesday. Year-to-date, DIA has gained 6.13%, versus a 7.12% 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 #5 of 75 ETFs in the Large Cap Value ETFs category.