Market technician Dave Chojnacki of Street One Financial recaps Monday’s bearish market action and updates the important technical levels to focus on as April gets off to a weak start.
The market opened the week and the day to the downside, as trade fears were once again on investors’ minds. Weaker than expected ISM and Construction Spending numbers did little to help equities.
Techs were leading the way to the downside, as Trump tweets about Amazon (NASDAQ:AMZN) were causing the stock to sell-off. The averages continued their slide into the PM, with the losses accelerating. By 2pm the major averages found a bottom and bounced off their lows of the day.
By the final bell, equities recovered some, but the losses remained significant. At the close, the Dow Jones Industrial Average (DJIA) was down 1.9%, the S&P 500 (SPX) fell 2.2%, and the Nasdaq 1oo (NDX) lost 2.9%. Breadth was decidedly negative, 4.2 to 1, on above average volume. ROC(10)’s declined in the session, with all three major indices remaining in negative territory.
RSI’s moved lower, with all, three indices in the mid to upper 30’s. The NDX is now the lowest at 36.6. The SPX is at 36.8 and the DJI at 38.1. All three major averages continue with their MACD below signal. The ARMS index ended the day at 2.49, which is a very bearish reading. Tech stocks continued to lead the major averages to the downside, but it was the break of the SPX 200D-SMA(2589), which accelerated the slide to the downside.
All three major indices are now negative for the year. The NDX closed at 6390 near the bottom of its lower Bollinger Band® of 6384. The NDX fell below its 150D-SMA of 6423. It holds above its 200D-SMA of 6270. The NDX moved below its 10% correction level of 6418.
The DJIA ended the day at 23644, below its 150D-SMA of 24010. It holds its 200D-SMA of 23423, but traded below that level intraday. The DJIA is well below its 10% correction level of 23955. The SPX closed at 2581, below its 200D-SMA of 2589. It is below its 10% correction level of 2587. The VIX spiked 18.2% to 23.62.
Near term support for the NDX is at 6300 and 6270. Near term resistance is at 6423 and 6450. Near term support for the SPX is at 2575 and 2550. Near term resistance is at 2589 and 2600.
Europe is trading mostly lower in early trade Tuesday, and U.S. Futures are slightly higher in the premarket. There are no major economic reports on tap today.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.45 (+0.19%) in premarket trading Tuesday. Year-to-date, DIA has declined -4.54%, versus a -3.52% 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.