Market technician Dave Chojnacki of Street One Financial examines Wednesday’s back-and-forth market action and updates the important technical indicators for the major U.S. averages, as the Dow continues to exhibit signs of short-term weakness.
Good economic numbers couldn’t overcome investors’ concerns with the Cohn resignation and tariffs on Wednesday morning. The major indices opened significantly lower, tried to move higher late morning, and then fell again near the noon hour.
Once again, we saw the S&P 500 (SPX) hit a technical level of support (20D-SMA), and reverse to the upside. The averages moved higher into the close, but only the Nasdaq 100 (NDX) was able to get into the black. The Dow Jones Industrial Average (DJIA) and SPX ended the day with small losses.
At the close, the DJIA was off 0.33%, the SPX slipped just 1.3 points, and the NDX added 0.24%. Breadth was just slightly positive, on average volume. ROC(10)’s advanced in the session, with the DJIA crossing into positive territory, joining the SPX and NDX.
RSI’s were mixed, with the NDX moving higher to 58.1. The DJIA and SPX ended lower at 46.1 and 50.7, respectively. The NDX and SPX remain with their MACD above signal. The DJIA continues with its MACD below signal. ARMS index ended the day at 1.48, a bearish reading, despite the late day strength.
After the poor start, we have to say the recovery during the day made for a successful session. The NDX continues to be the leader in near term technical strength. It closed at 6929, above all near term technical measures. It has recovered 87% of the loss since the early February lows. Its 20D-SMA sits at 6742.
The SPX action looked like it was controlled by programmatic trading. It found support right at its 20D-SMA of 2700 and then closed right at its 50% retrace level of 2726. The SPX may find some headwind at its 50D-SMA, which is at 2738.
The DJIA closed at 24801, falling back below its 20D-SMA of 24869. The DJIA’s near term technicals are the weakest of the big three.
The VIX fell 3.2% to 17.76, despite choppy trading.
Near term support for the NDX is at 6900 and 6850. Near term resistance is at 6950 and 7000. Near term support for the SPX is at 2700 and 2675. Near term resistance is at 2738 and 2760.
Europe is higher in early trade Thursday, while U.S. Futures are slightly higher in the premarket. Major economic reports on tap today include the Challenger Job Report at 7:30am, Jobless Claims at 8:30am, and the EIA Natural Gas report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.56 (+0.23%) in premarket trading Thursday. Year-to-date, DIA has gained 0.30%, versus a 2.22% 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 #1 of 80 ETFs in the Large Cap Value ETFs category.