Market technician Dave Chojnacki of StreetOne Technical Analysis takes a deep dive into the underlying technicals for the major U.S. averages.
Durable Goods Orders came in better than expected on Thursday, while Unemployment Claims were near their target. MSFT earnings beat expectations and set the tone for the market to gap-up at the open. The SPX had been down for 6 straight sessions going into Thursday, so a bounce was over-due. The major indices made a steady march higher through the session and only a last hour sell-off kept the averages off their highs. The NDX which has been beaten down recently was the best performer of the day on the back of Techs. The Dow and SPX ended with significant gains in the session. After the bell, AMZN and GOOG reported earnings and both beat on the bottom line, but missed on the top line. After hours AMZN was down 9% and GOOG was trading down 5%. The 10YR ended the day at 3.14.
At the close on Thursday, the DJIA added 1.6%, the SPX gained 1.8%, and the NDX was up 3.3%. Breadth was decidedly negative, 2 to 1, above average volume. ROC(10)’s advanced in the session, with the NDX crossing back into positive territory. The DJIA and SPX remained in negative territory. RSI’s moved higher, with the NDX now the leader at 40.8. The DJIA ended at 38.2 and the SPX at 34.6. All three major indices remain with their MACD below signal. The ARMS index ended the day at 1.08, a neutral reading at the close.
The market bounced off yesterday lows, but remained below their 200D-moving averages. There was some improvement in near term technicals. The NDX and SPX finished above the mid-point of the prior sessions large Bear candle. The DJIA ended the day at 24984, below its 200D-SMA of 25152. It continued below its 50WK of 25025 and below its 61% retrace level of 25192. The NDX closed at 7016, above its 50WK-SMA of 6957. It remains below its 200D-SMA of 7065 and its 50D-SMA of 7059.
The NDX closed above its 61% retrace level of 6917. The SPX closed at 2705, holding below its 200D-SMA of 2767. It remains below its 50% retrace level of 2755. The SPX is below its 50% retrace level of 2755 and its 50WK-SMA of 2750. The VIX finished down 4% to 24.22.
Near term support for the NDX is at 6892 and 6775. Near term resistance is at 7065 and 7150. Near term support for the SPX is at 2651 and 2600. Near term resistance is at 2767 and 2800.
Europe is lower in early trade Friday, and US Futures are significantly lower premarket. Major economic reports on tap today include GDP at 8:30am and Consumer Sentiment at 10:00am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (DIA) fell $3.37 (-1.35%) in premarket trading Friday. Year-to-date, DIA has gained 1.81%, versus a 1.61% 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.