Market technician Dave Chojnacki of StreetOne Technical Analysis recaps Tuesday’s big rally and updates the underlying technicals to watch for the major U.S. averages.
Economic numbers came in where expected, however, we had a jump in the JOLTS number to over 7 million. This sent signs that the economy is still growing and strong. You would expect this to push rates higher, but the 10YR actually came down to 3.16.
Equities opened higher after the recent pullback and gained strength throughout the session. Techs were strong pushing the NDX to the best gains of the day. Small-caps, which lead the recent pullback, had a good day with the iShares Russell 2000 ETF (NYSE:IWM) gaining 2.9%. The Dow Jones Industrial Average (Dow) and S&P 500 also finished with strong gains. Lower volume raised concern over the conviction to the gains.
At the close on Tuesday, the Dow added 2.1%, the SPX was also up 2.1%, and the NDX gained 2.9%. Breadth was decidedly positive, 5 to 1, on slightly below average volume. ROC(10)’s advanced for all three major indices, but they remained in negative territory. RSI’s moved higher, with the Dow now the strongest at 45.4. The NDX finished at 45.1 and the SPX was higher at 41.6. All three major indices remain with their MACD below signal. The ARMS index ended the day at 1.03, a neutral reading.
The major averages had a strong day trying to turnaround the recent losses. All three major indices are now above their 200D moving average and they developed a large “Bull Candle” in the session. Near term, MACD’s are below signal and the averages remain below their 50D-SMA’s. The Dow closed at 25798, below its 50D-SMA of 25991. It is above its 200D-SMA of 25100. It also holds above its 50% retrace level of 25494.
The NDX finished at 7276, above its 200D-SMA of 7049. It continues below its 50D-SMA of 7460. It is also just below its 20WK -SMA of 7358. The SPX closed at 2809, below its 50D-SMA of 2873. The SPX is below its 20WK-SMA of 2829, but above its 50WK-SMA of 2747. It closed above its 200D-SMA of 2767. The VIX spiked lower by 17.23% to 17.62.
Near term support for the NDX is at 7049 and 7041 and 6908. Near term resistance is at 7358 and 7460. Near term support for the SPX is at 2767 and 2747. Near term resistance is at 2850 and 2873.
Europe is lower in early trade Wednesday, while U.S. Futures are lower premarket. Major economic reports on tap include Housing Starts/Building Permits at 8:30am and the FOMC Minutes at 2:00PM.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (DIA) fell $0.82 (-0.32%) in premarket trading Wednesday. Year-to-date, DIA has gained 5.13%, versus a 5.49% 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 #4 of 82 ETFs in the Large Cap Value ETFs category.