Market technician Dave Chojnacki of Street One Financial recaps Wednesday’s decent-sized pullback for the U.S. markets and updates the important technicals to watch as we look for a bounce off the recent weakness.
Decent economic numbers on Wednesday morning did little to help equities. The prior session’s losses set the stage for more selling. The major averages have been signaling near term weakness with waning momentum and MACD’s crossing below signal.
The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) have been a little weaker than the Nasdaq 100 (NDX) recently, but it too is beginning to show signs of weakness. The major indices ended the day with moderate losses for the second straight session. Volume picked up in the session, lending some conviction to the move.
At the close, the DJIA was down 0.59%, the SPX gave up 0.55%, and the NDX fell 0.56%. Breadth was negative, 1.9 to 1, on above average volume. ROC(10)’s declined, with the DJIA and SPX moving into negative territory. The NDX remains in positive territory.
RSI’s fell in the session, with the NDX continuing to lead the way at 59.1. The DJIA ended at 52.2 and the SPX at 48.4. Needless to say most of the over-bought levels have been diminished. The NDX had its MACD cross below signal, joining the DJIA and SPX. The ARMS index ended the day at 0.86, slightly bullish. It had been as high as 1.64 during the session.
The major averages fell for the second straight day on Wednesday and further weakened near term technicals. We had the DJIA and SPX close below their 20D-SMA’s, momentum fell and the NDX had its MACD cross below signal. The DJIA ended the day at 23271. Next critical support is at 23000. Its 50D-SMA is at 22857.
The SPX closed at 2564, just 22 points above its 50D-SMA of 2542, which is next critical support. The NDX closed at 6258, with its 20D-SMA of 6219. The VIX spiked 13.2% to 13.13, another sign of near term weakening.
Near term support for the NDX is at 6250 and 6219. Near term resistance is at 6300 and 6345. Near term support for the SPX is at 2550 and 2542. Near term resistance is at 2576 and 2594.
Europe is higher in early trade Thursday, while U.S. Futures are also pointing higher in the premarket. It’ll be another busy day of economic reports, with Jobless Claims at 8:30am, Philly FED at 8:30am, Import/Export Prices at 8:30am, Industrial Production at 9:15am, Housing Market at 10:00am, and EIA Natural Gas at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $1.03 (+0.44%) in premarket trading Thursday. Year-to-date, DIA has gained 19.71%, versus a 15.78% 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 80 ETFs in the Large Cap Value ETFs category.