Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with a deep dive into the important technical indicators for the major U.S. averages, which responded extremely bullishly to last week’s jobs reports.
The major indices were inching higher during the week and then exploded when excellent Employment numbers were released on Friday morning. The averages gapped up at the open and never looked back as the rally continued throughout the session.
The major indices closed with significant gains, ending near their highs of the session. The Nasdaq 100 (NDX) ended up for the 6th straight session, to a new record high. At the close on Friday, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed up 1.7%, and the NDX was up 1.9%. Breadth was decidedly positive, 2.6 to 1, on above average volume.
RSI’s moved higher with the NDX the strongest at 65.3. The DJIA RSI ended at 54.2 and the SPX at 59.2. The ARMS Index ended at 0.63, a very bullish reading. For the week, the DJIA added 3.2%, the SPX was up 3.5%, and the NDX gained 4.2%. The VIX fell 11.4% on Friday to 14.64.
For the week, the VIX was down 25.2%. Volatility is moving back to very low levels. We get Retail Sales and Housing Starts this week, and options expire on Friday.
Long term, technicals continue with their bias to the upside. This was confirmed on Friday with the NDX recording a new record high of 7101. After a strong week, the DJIA and SPX now have their record highs within sight. All three major averages remain comfortably above their 200D-SMA’s.
Short term, we saw the DJIA and SPX cross above their 50D-SMA’s of 25296 and 2741, respectively. Near term, all 3 major averages developed a large “Bull’ candle on Friday, contributing to a strong week. The DJIA and SPX moved above their 61% retracement levels on Friday. All 3 major indices have now had their MACD cross above signal. The NDX near term target is now at 7295.
Europe is higher in early trade Monday, and U.S. Futures are pointing higher in the premarket. There are no major economic reports scheduled for today.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.93 (+0.37%) in premarket trading Monday. Year-to-date, DIA has gained 2.50%, versus a 4.50% 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 #1 of 80 ETFs in the Large Cap Value ETFs category.