Market technician Dave Chojnacki of StreetOne Technical Analysis dives into the underlying technicals for the major U.S. averages.
Existing home sales came in weaker than expected on Friday, continuing to demonstrate the slow housing market. Equities looked past the report and opened higher as they attempted to bounce off the big loss in the prior session. Interest rates and Trade continue to wear on the Market. It was a choppy session on Friday in a choppy week. The major indices traded near their 200D moving average during the week.
On Friday, the major averages ended the day little changed and mixed. The SPDR Dow Jones Industrial Average (NYSE:DIA) had the best session on Friday ending positive, while the NDX and SPX were slightly lower. Small-caps continue to underperform since the beginning of September and the IWM (Russell 2000) is way below its 200D-SMA. For the week, the DJIA was up 0.4%, the SPX ended with no change, and the NDX was down 0.6%.
At the close on Friday, the DJIA was up 64.8 points, the SPX slipped 1 point, and the NDX fell 8.8 points. Breadth was slightly negative, above average volume. ROC(10)’s advanced in the session for all three major indices, while they remained in negative territory. RSI’s were mixed, with the DJIA moving higher to 40.5. The NDX ended at lower at 38.7 and the SPX slipped to 35.9. All three major indices remain with their MACD below signal. The ARMS index ended the day at 0.80, a slightly bullish reading at the close.
As we mentioned above, the week was choppy for equities. The major averages flirted with their 200D moving average all week and ended little changed. We still see some near term and short term weakness until we establish a base near the 200 level, or if we drop through more down side. The DJIA closed at 25444, holding above its 200D-SMA of 25158. It remains below its 50D-SMA of 25987 and below its 50% retrace level of 25494. It continues to hold its 50WK-SMA of 24994.
The NDX finished at 7107, above its 200D-SMA of 7058. It holds above its 50% retrace level of 7059 and its 50WK-SMA of 6943. It continues below its 50D-SMA of 7442. The SPX closed at 2767, just one point below its 200D-SMA of 2768. It barely holds above its 50WK-SMA of 2746. It remains above its 50% retrace level of 2755. The VIX finished at 19.89, down just 0.85%.
Near term support for the NDX is at 7058 and 7000. Near term resistance is at 7225 and 7349. Near term support for the SPX is at 2746 and 2714. Near term resistance is at 2800 and 2827. Europe is higher in early trade, while US Futures are higher premarket.
The SPDR Dow Jones Industrial Average (NYSE:DIA) rose $1.01 (+0.40%) in premarket trading Monday. Year-to-date, DIA has gained 3.66%, versus a 3.93% 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.