Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with a deep dive into the technical indicators for the major U.S. averages, which have seen steady improvement despite Friday’s selloff, as volatility creeps back down again.
Equities opened lower on Friday, being dragged down by a myriad of problems. Rates continue to rise with the 10-Year Treasury Note moving up to 2.95%. We continue to see trouble with two big tech names, Apple Inc (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB). AAPL ended the day down 4.1% and FB closed down 1%. Both issues impacted the Nasdaq 100 (NDX), which was down significantly on the day. W
e also have rising energy prices, which threaten negating the recent tax decreases. Earnings continue to beat, but were unable to lift stocks on Friday. By the end of the day, the major indices ended down significantly, but were able to hang on to small gains for the week. Volume also picked up on Friday with Options expiring.
At the close, the Dow Jones Industrial Average (DJIA) lost 0.82%, the S&P 500 (SPX) was down 0.85%, and the NDX gave up 1.5%. Breadth was negative, 2 to 1, on above average volume. ROC(10)’s advanced in the session and remained in positive territory.
RSI’s slipped lower in the session, with the DJIA taking over the lead at 49.9. The NDX ended at 49 and the SPX at 49.6. All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.04, a neutral reading.
Last week started off to the upside, but equities pulled back the last 2 sessions. They held on to small gains for the week: DJIA-+0.4%, NDX +0.5%, SPX+0.5%. All three major averages fell back below their 50D-SMA ‘s on Friday, after moving above during the week. The DJIA closed at 24462, falling below its 50D-SMA of 24601. The SPX ended the day at 2670, holding its 20D-SMA of 2645, but falling below its 50D-SMA of 2686. From its high in January(2872) to closing low pullback in Feb(2581), it remains below the 50% retracement level of 2726. The NDX closed at 6667, closing below its 50D-SMA(6737). It holds its 20D-SMA of 6599. The VIX ended at 16.88, down 3% for the week.
Near term support for the NDX is at 6599 and 6550. Near term resistance is at 6700 and 6737. Near term support for the SPX is at 2650 and 2645. Near term critical resistance is at 2686 and 2700.
Europe is trading mostly lower in early action on Monday, while U.S. Futures are pointing slightly higher in the premarket. The only major economic report on tap today is Existing Home Sales at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $0.02 (-0.01%) in premarket trading Monday. Year-to-date, DIA has declined -1.17%, versus a -0.09% 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 81 ETFs in the Large Cap Value ETFs category.