Market technician Dave Chojnacki of StreetOne Technical Analysis recaps Tuesday’s anemic market action and previews Wednesday’s session with a deep dive into the market’s underlying technicals.
With no major economic reports to move the Market on Tuesday, investors continued to look at interest rates. Rapidly rising rates have spooked equities in recent sessions, as the SPX and NDX were down for three straight sessions. The major indices opened mixed and traded mixed for the entire session. Techs got some love early, but reversed late morning. By the end of the session, the NDX was able to eke out a small gain and end its losing streak. Both the DJIA and SPX ended the day with small losses. It was the fourth straight loss for the SPX. Rates eased in the session, with the 10YR falling to 3.21.
At the close on Tuesday, the DJIA slipped 56 points, the SPX inched down 4 points, and the NDX added 0.26%. Breadth was slightly negative, on average volume. ROC(10)’s were mixed with the DJIA and NDX advancing. The SPX declined in the session and all three major indices remain in negative territory. RSI’s were mixed, with the NDX and DJIA rising and the SPX falling. The DJIA continues to be the strongest at 53.8. The NDX ended at 38 and the SPX at 43.6. All three major indices remain with their MACD below signal. The ARMS index ended the day at 1.23, a slightly bearish indication.
It was good to see the NDX break its losing streak, even though it gave up some of its early gains. The NDX closed at 7371, below its 20D-SMA of 7528. It also is below its 50D-SMA of 7484. It has additional support at its 20 week moving average of 7338. Its 38% Fibonacci retracement level is at 7200. It is now 4.2% from its recent record high. The DJIA closed at 26430, just below its 20D-SMA of 26449. It continues to hold above its 50D-SMA of 25991. It developed a ‘Doji” in the last session, indicating some of the indecision in the market. The SPX ended the day at 2880, right at its 50D-SMA. The SPX continues just below its 20D-SMA of 2907. The VIX ended at 15.95, up 1.6%.
Near term support for the NDX is at 7338 and 7200. Near term resistance is at 7484 and 7500. Near term support for the SPX is at 2850 and 2823. Near term resistance is at 2900 and 2912.
Europe is lower in early trade Wednesday, while US Futures are slightly higher premarket. Major economic reports on tap include PPI at 8:30am and Wholesale Inventories at 10:00am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) rose $0.22 (+0.08%) in premarket trading Wednesday. Year-to-date, DIA has gained 7.70%, versus a 8.13% 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.