Market technician Dave Chojnacki of Street One Financial wraps up the trading week with a recap of Thursday’s big equities rally, and updates the key technical indicators that investors and traders should focus on amid continued unabated bullish action in the U.S. averages.
After their first loss in 2018 on Wednesday, equities came back strong on Thursday. Buyers stepped right up to buy the little dip from the prior session. The rally was across the board, as breadth was strongly positive.
The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) were the strongest in the session as, Trump sectors like Energy and Materials were the stars of the day. All three major averages finished at or near their highs of the session and at new record highs.
At the close, the DJIA gained 0.81%, the SPX added 0.7%, and the Nasdaq 100 (NDX) moved up 0.69%. Breadth was decidedly positive, 3.2 to 1, on average volume. ROC(10)’s moved higher across the board and remained in positive territory.
RSI’s moved higher as the major indices remained in overbought territory. The DJIA continues to lead at 83.5, the SPX at 80.9 and the NDX at 74.9. All three MACD’s continue above signal. The ARMS index ended at 0.71, a bullish reading. For the second day in a row equities ended strong. While we expected to see more of a pullback from the near term extended levels, it was not to be.
We expected more of a pullback at 2750 for the SPX, but now it looks like a clear path to 2800. The SPX closed at 2767, which was also its high of the day, as it hit new record highs. It continues to move further from its 20D-SMA of 2701. It also closed just a point above its upper Bollinger Band® of 2766.
The DJIA closed 25574 and traded as high as 25575. It remains comfortably above its 20D-SMA of 24918. It is back above its upper Bollinger Band® of 25506.
The NDX closed at 6708, its high of the session and a new record. It was its first close over the 6700 level. Its 20D-SMA is now at 6520. The VIX diverged from equities, moving higher to end at 9.88.
Near term support for the NDX is at 6700 and 6675. Near term resistance is at 6750 and 6775. Near term support for the SPX is at 2750 and 2737. Near term resistance is at 2788 and 2800.
Europe is higher in early trade Friday, and U.S. Futures are significantly higher in the premarket. Major economic reports today include the Consumer Price Index at 8:30am, Retail Sales at 8:30am, and Business Inventories at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.96 (+0.38%) in premarket trading Friday. Year-to-date, DIA has gained 3.33%, versus a 3.47% 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 79 ETFs in the Large Cap Value ETFs category.