Market technician Dave Chojnacki of StreetOne Technical Analysis recaps Tuesday’s trading action and updates the important technical levels to watch for the major U.S. averages.
Equities opened higher on Tuesday, after several weak sessions. Economic reports came in as expected and there was a hint that Trade talks may be improving. The Nasdaq 100 (NDX), which has been getting slammed because of the FANG and big Techs, met some important support on Monday PM. The NDX bounced off this support and Industrials were moving up on the Trade optimism to move all indices higher.
The major indices hit their highs mid-day and then began a slow slide into the final bell. Investors were waiting for AAPL’s earnings after the bell and today’s FOMC announcement for further direction. AAPL’s numbers beat and shares rose after hours. The major averages finished Tuesday with moderate gains ending their recent slide. Investors will be waiting for the Employment Report at the end of the week.
At the close on Tuesday, the Dow Jones Industrial Average (DJIA) added 0.43%, the S&P 500 (SPX) was up 0.49%, and the NDX gained 0.54%. Breadth was positive, 2 to 1, on slightly above average volume. ROC(10)’s advanced in the session, with the NDX continuing in negative territory. The DJIA and SPX remain in positive territory.
RSI’s moved higher, with the DJIA continuing to be the strongest at 62.5. The NDX ended at 47.5 and the SPX finished at 57.5. The SPX MACD crossed below signal, joining the NDX. The DJIA MACD remains above signal. The ARMS index ended the day at 1.19, a slightly bearish reading at the close.
The major indices broke their brief losing streak, especially the NDX, which had got hit pretty hard in the previous 3 sessions. There was strong support in the 7175 and 7200 range. We had the 50D-SMA and trend-line support at these levels. It appears to have found support and bounced off those levels. We look for a buy signal above 7308. The NDX has support at its 50D-SMA of 7182. There is resistance at its 20D-SMA of 7306.
The DJIA ended at 25415, holding above its 20D-SMA of 25011. It remains above the 50% retrace level of 25074. The SPX closed at 2816. There is some caution near term, with its MACD crossing below signal. Perhaps this may be a false signal, but something to watch. It remains above its 20D-SMA of 2796 and 50D-SMA of 2765. The VIX fell 10% to finish at 12.83. Volatility remains relatively low.
Near term support for the NDX is at 7200 and 7182. Near term resistance is at 7250 and 7306. Near term support for the SPX is at 2812 and 2800. Near term critical resistance is at 2850 and 2862.
Europe is mostly lower in early trade Wednesday, and U.S. Futures are mixed in the premarket. Major economic reports on tap today include ADP Employment at 8:15am, ISM Manufacturing Index at 10:00am, Construction Spending at 10:00am, and the FOMC Announcement at 2:00pm.
The SPDR Dow Jones Industrial Average (NYSE:DIA) fell $0.33 (-0.13%) in premarket trading Wednesday. Year-to-date, DIA has gained 3.60%, versus a 5.84% 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 81 ETFs in the Large Cap Value ETFs category.