Technical analyst Dave Chojnacki of Street One Financial takes the pulse of the U.S. markets, as stocks stretch to yet another new all-time high and extend their overbought levels further.
Equities opened higher on Tuesday, as the Dow Jones Industrial Average (DJIA) and S&P 500 were continuing their rally from the prior session. The major indices traded in a narrow range, but maintained a steady pace to the upside.
Volume was on the low side again, but this time tech stocks decided to participate. This helped push the Nasdaq 100 to small gains, but not enough to move to new highs. The DJIA and SPX also ended with small gains, but they moved to new highs for the second straight session. It was actually the fourth straight record close for the SPX.
At the close, the DJIA was up 0.37%, the SPX gained 0.22%, and the NDX added 0.22%. Breadth was slightly positive, 1.26 to 1, on below average volume. ROC(10)’s advanced in the session, and all three major indices finished in positive territory. RSI’s moved higher, with the DJIA at 76 and the SPX at 73.7, moving into overbought area. Just a note, equities can continue to move upward for a time, despite being in overbought territory.
The NDX MACD crossed above signal, joining the other two major indices. The ARMS index ended at 0.68, a fairly bullish reading. The DJIA closed at 22641, a new record close. During the session it traded as high as 22646. Its upper Bollinger Band® sits at 22705.
The NDX is the only index of the big three not making a new high in recent sessions. It closed at 5995, yesterday, just 9 points from its record closing high of 6004. The NDX MACD crossing above signal is a strong near term positive signal. It maintains well above its 20D-SMA of 5957.
The SPX closed at a record high of 2534, and traded as high as 2535. It remains above its 20D-SMA and Trend-line, both at 2499.
iShares Russell 2000 (NYSE:IWM) also closed at a new high (150.33) for the 8th straight session. The VIX was up 0.06 to 9.51.
Near term support for the NDX is at 5988 and 5975. Near term resistance is at 6004 and 6009. Near term support for the SPX is at 2525 and 2512. Near term resistance is at 2537 and 2550.
Europe is lower in early trade Wednesday, while U.S. Futures are mixed in the premarket. Major economic reports on tap today include ADP Employment at 8:15am, PMI Services at 9:45am, ISI Non-Mfg Index at 10:00am, the EIA Report at 10:30am, and Fed Chair Janet Yellen Speaks at 3:15pm.
The SPDR Dow Jones Industrial Average (NYSE:DIA) was unchanged in premarket trading Wednesday. Year-to-date, DIA has gained 16.26%, versus a 14.17% 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 75 ETFs in the Large Cap Value ETFs category.