Market technician Dave Chojnacki of StreetOne Technical Analysis examines Thursday’s market action and updates the underlying technicals for the major U.S. averages, as we head into a holiday weekend.
Economic numbers came in as expected on Thursday, but the Market opened to the downside. After multiple sessions of record highs in equities, the averages were poised for a pullback. The trading was choppy during the session, and the best performer was the NASDAQ 100. The NDX was helped by Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) making new highs. AMZN closed above the 2000 level. Some of yesterday’s weakness was blamed on additional tariffs expected on China next week. On the other hand, Trade talks with Canada seem to be improving. By the end of the day, the major indices settled with small losses, with the Dow Jones Industrial Average (Dow) the biggest loser. The 10YR ended at 2.86%.
The Dow gave up 0.53%, the S&P 500 was down 0.44%, and the NDX fell 0.23%. Breadth was decidedly negative, 1.9 to 1, on above average volume. ROC(10)’s declined across the board, but all three major indices remain in positive territory. RSI’s declined, with the NDX the strongest index at 69.4. The SPX ended at 66.2 and the DJIA is at 63.1. The NDX and SPX are nearing overbought levels in the near term. MACD’s for all three major indices are above signal. The ARMS index ended the day at 1.77, a fairly bearish reading at the close.
The recent record highs for the NDX and SPX continue to display the strong market conditions. The Dow has yet to catch up. Technical indicators continue to be strong. The DJIA closed at 25986, which is 630 points below its all-time record high of 26616. It continues comfortably above its 20D-SMA of 25643. The NDX, which has been the strongest of all three major averages, closed at 7642, just off its record high. It is nearing overbought levels, and we may see some sideways action as it consolidates recent gains. It remains well above its 20D-SMA of 7456. The SPX closed at 2901, pulling back from its record high, but holding the 2900 level. The 20D-SMA provides near term support at 2859. The SPX 50D-SMA is now at 2811. The VIX spiked 10.4% to finish at 13.53.
Near term support for the NDX is at 7500 and 7456. Near term resistance is at 7660 and 7700. Near term support for the SPX is at 2875 and 2859. Near term critical resistance is at 2914 and 2925.
Europe is lower in early trade Friday, and US Futures are lower pre-market. Major economic reports on tap today include Chicago PMI at 9:45am and U Michigan Sentiment at 10:00am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (DIA) fell $0.41 (-0.16%) in premarket trading Friday. Year-to-date, DIA has gained 5.98%, versus a 9.22% 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 81 ETFs in the Large Cap Value ETFs category.