Technical analyst Dave Chojnacki of Street One Financial wraps up the trading week with a recap of Thursday’s market action, in which another solid rally for equities took shape, and updates the key technical levels to watch for the major US averages.
Despite weaker than expected Initial Claims numbers, equities got off to a positive start on Thursday. Trade fears, which have been at the top of investors minds, diminished somewhat on comments from the White House.
After the prior session’s strong reversal and gains, equities were anxious to continue to their recovery from the recent lows. The strength in yesterday’s session was in Energy and Consumer Discretionary sectors, which pushed the Dow Jones Industrial Average to the best gainer on the day. The S&P 500 (SPX) and NASDAQ 100 (NDX) ended with moderate gains on the day.
At the close, the Dow gained .99%, the SPX added 0.69%, and the NDX was up 0.5%. Breadth was decidedly positive, 2.7 to 1, on average volume. ROC(10)’s advanced in the session, with all three major indices remaining in negative territory.
RSI’s inched higher, with the Dow the strongest at 50.4. The NDX finished at 45.4 and the SPX at 48.1. The Dow had its MACD cross above signal in yesterday’s session, a positive near term technical signal. The NDX and SPX remain with their MACD below signal. The ARMS index ended the day at 0.70, a positive reading. All three major indices were positive for the third day in a row, as they continued to attempt making a bottom. They also are above their 10% correction level and 1-year trend-lines.
The SPX has now spent 9 sessions building a base near and above its 200D-SMA of 2592. Yesterday it closed at 2662, just 11 points below its 2017 close of 2673. It traded as high as 2672 in the session. It remains just below its 20D-SMA of 2685.
The Dow moved above its 20D-SMA of 24448, closing at 24505. The NDX closed at 6594 and is up 3% YTD. It remains significantly above its 200D-SMA of 6283. The NDX continues below its 20D-SMA of 6773. The VIX fell 5.5% to 18.94. It’s the first time it has been below the 20 handle since 3/22.
Near term support for the NDX is at 6550 and 6500. Near term resistance is at 6600 and 6773. Near term support for the SPX is at 2650 and 2612. Near term resistance is at 2673 and 2685.
Europe is trading lower in early trade Friday, and US Futures are significantly lower in the premarket. Major economic reports today include the Employment Report at 8:30am and Consumer Credit at 3:00pm.
The SPDR Dow Jones Industrial Average ETF (DIA) fell $2.09 (-0.85%) in premarket trading Friday. Year-to-date, DIA has declined -1.00%, versus a -0.46% 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 80 ETFs in the Large Cap Value ETFs category.