Market technician Dave Chojnacki of Street One Financial recaps Monday’s much-needed market pullback and updates the important technical indicators investors and traders should focus on during these last few days of January.
Equities opened lower on Monday and were never able to recover. After a string of new highs, the major indices finally had a down day.
By the end of the day, the loss was not significant, but the losses were widespread. Breadth was significantly negative, as many more equities declined than rose in the session. All three major indices closed near their lows of the session.
The Energy and Tech sectors were the big losers on the day. With the major averages extremely overbought, yesterday’s pullback was probably healthy for the market. At the close, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) fell 0.67%, and the Nasdaq 100 (NDX) fell 0.49%. Breadth was decidedly negative, 5 to 1, on average volume. ROC(10)’s declined in the session, but remained in positive territory.
RSI’s fell in the session, with the DJIA moving down to 78.8. The SPX finished at 76.8 and the NDX at 75.8. All three remain in near term overbought territory. All three MACD’s continue above signal. The ARMS index ended at 0.69 a fairly bullish reading, despite the fact that equities ended near their lows of the session.
The major indices had a moderate loss in the session, on a pullback in volume and they held near term support levels. The DJIA closed at 26439, just four points above its low of the session. It remains above its 20D-SMA of 25718. Its upper Bollinger Band® now sits at 26850.
The NDX closed at 6988 and traded as low as 6974 in the session. Its 20D-SMA is now at 6755.
The SPX closed at 2853, just 2 points above its low of the day. It continues comfortably above its 20D-SMA of 2780. The SPX upper Bollinger Band® is now at 2889.
iShares 20+ Year Treasury Bond (NASDAQ:TLT) traded below its critical support of 122.50, but managed to close at 122.73. The VIX spiked 24.6% to 13.84, with Volatility coming back form the dead.
Near term support for the NDX is at 6950 and 6925. Near term resistance is at 7000 and 7022. Near term support for the SPX is at 2850 and 2825. Near term resistance is at 2872 and 2889.
Europe is lower in early trade Tuesday, and U.S. Futures are significantly lower in the premarket. The only major economic report on tap today is Consumer Confidence at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $1.95 (-0.74%) in premarket trading Tuesday. Year-to-date, DIA has gained 6.78%, versus a 6.68% 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 #3 of 79 ETFs in the Large Cap Value ETFs category.