Market technician Dave Chojnacki of Street One Financial recaps Wednesday’s see-saw action that would up with stocks little changed, despite pivotal Federal Reserve commentary, and updates the important technical levels to watch out for as we head toward the end of the week.
Stocks were slightly higher at the open on Wednesday, with not much effect from a weak Housing Starts number. The averages diverged late in the AM, as the Dow Jones Industrial Average and S&P 500 held on to small gains, while the Nasdaq 100 began to decline.
There was not much movement as investors waited for the FOMC announcement at 2PM. As expected, rates remained unchanged and the Fed said they would begin the wind down of the Balance sheet in October. Traders were slow to react, but then pushed equities lower.
The major indices quickly found support and then headed higher into the close. The late rally was enough for the DJIA and SPX to make new highs once again. At the close, the DJIA was up 0.19%, the SPX inched up 1.59 of a point, and the NDX lost 0.29%.
Breadth was slightly positive, 1.2 to 1, on average volume. ROC(10)s declined, with all three major indices in positive territory. RSIs were mixed, with the DJIA moving up to 72.3 (slightly overbought) and the SPX to 67.5. The NDX moved down to 55.6.
All three major averages remain with their MACD above signal. The ARMS index ended the day at 0.90, a slightly bullish reading.
It was a lethargic session until the FOMC announcement. The DJIA closed at new high of 22412 and an intraday high of 22413. The DJIA is just below its upper Bollinger Band® of 22433.
The SPX closed at a new high of 2508 and new intraday high of 2508.85. The SPX remains comfortably above its 20D-SMA of 2473 and its 9 month trend-line (2476).
The NDX closed at 5973, but remains above its 20D-SMA of 5938. The NDX remains below its recent closing high of 6004.
The VIX gave up 3.9% to finish at 9.78. The volatility gauge remains at extremely low levels, which bodes well for stocks moving forward.
Near term support for the NDX is at 5950 and 5938. Near term resistance is at 5975 and 6000. Near term support for the SPX is at 2500 and 2476. Near term resistance is at 2512 and 2525.
Europe is higher in early trade Thursday, while U.S. futures are mixed in the premarket. We’ll see a slew of economic data released today, including Jobless Claims at 8:30am, Philly Fed at 8:30am, FHFA House Price Index at 9:00am, Leading Indicators at 10:00am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Thursday. Year-to-date, DIA has gained 15.06%, versus a 12.90% 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.