Market technician Dave Chojnacki of Street One Financial wraps up the trading week with a review if Thursday’s bearish market action, and updates the key technical levels that will likely influence Friday’s trading and beyond.
Jobless Claims numbers came in about where they were expected on Thursday, but equities still opened to the downside. Most of the early weakness was in the Semiconductor sector, as lower prices for chips were predicted. This helped push Techs and the NASDAQ 100 (NDX) to be the biggest losers on the day.
The major averages hit their lows mid-afternoon, and then attempted to recover going into the final bell. The major indices ended with moderate losses, despite the late day rally. At the close, the Dow Jones Industrial Average (Dow) fell 0.34%, the S&P 500 (SPX) was down 0.57%, and the NDX lost 0.85%. Breadth was negative, 2.1 to 1, on below average volume. ROC(10)’s declined in the session, however, all three major averages remained in positive territory.
RSI’s slipped lower in the session, with the NDX leading at 53.9. The Dow and SPX slipped to 53.1. All three major indices continue with their MACD above signal. The ARMS index ended the day at 0.70, a fairy strong bullish reading. It was the second weak session for equities in a row.
Weakness in Semi’s and a rising 10-year Treasury yield gave traders a reason to sell stocks. Equities have had a good rally since early April, so consolidation at these levels is normal. Once again we will be watching the 50D-level as both the Dow and SPX traded below during the session. They did recover and close above, which was a good sign.
The Dow ended the day at 24664, above its 50D-SMA of 24609. It traded as low as 24557 in the session. The next near term resistance level for the Dow is at 25449. The SPX closed at 2693, falling below the 2700 handle. It managed to close above the 50D-SMA of 2687, before trading below at 2681. The NDX closed at 6774, holding above its 50D-SMA (6735) throughout the session. Next critical resistance is at 6949. The VIX ended at 15.96, up 2.3% in the session.
Near term support for the NDX is at 6750 and 6735. Near term resistance is at 6850 and 6949. Near term support for the SPX is at 2687 and 2650. Near term critical resistance is at 2741 and 2750.
Europe is mixed in early trade Friday, while U.S. Futures are pointing slightly higher in the premarket. There are no major economic reports scheduled today.
The SPDR Dow Jones Industrial Average (SI:SPDR) (DIA) rose $0.11 (+0.04%) in premarket trading Friday. Year-to-date, DIA has declined -0.33%, versus a 0.76% 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.