Market technician Dave Chojnacki of Street One Financial looks at the state of the U.S. markets from a technical perspective, as stocks appear to be entering a late summer consolidation period.
The market opened to the upside on Tuesday, with the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) hitting new intraday highs before the noon hour. Equities reversed direction in the PM, however, and fell through most of the afternoon.
Analysts were pointing to Geopolitical issues for keeping equities in check. The Dow streak of new highs ended at ten, as it closed the day in the red. The SPX and Nasdaq 100 (NDX) also ended with small losses, on below average volume.
At the close, the DJIA fell 33 points, the SPX moved down 5.9 points, and the NDX slipped 8.3 points. Breadth was negative, 1.8 to 1, on below average volume. Volume did pick up slightly from the prior session.
ROC(10)’s were mixed with the SPX crossing down into negative territory. The DJIA moved lower, but stayed in positive territory. The NDX moved to the upside, but remained in negative territory.
The DJIA RSI is at 74.4, a slightly overbought level. The NDX and SPX are holding right near the 60 handle. MACD’s for the NDX and SPX continue below signal. The DJIA remains above signal. The ARMS index ended the day at 1.04, a neutral reading.
The PM reversal lead to the DJIA streak of new highs ending. It did hit a new intraday high of 22179, which was right near its upper Bollinger Band® of 22185. It is comfortably above its 20D-SMA of 21770.
The NDX and SPX have been trending sideways since mid-July and consolidating their recent highs. This sideway action has lead to their MACD’s to fall below signal. The SPX did make a new intraday high of 2490 in the session, before rolling over and closing at 2474. It closed 5 points above its 20D-SMA of 2469. Its intraday high was 1 point above its upper Bollinger Band of 2489. The NDX remains 16 points above its 20D-SMA of 5894.
The VIX spiked up 10.3% to 10.96 amid the intraday reversal, bouncing off recent all-time lows.
Near term support for the NDX is at 5900 and 5894. Near term resistance is at 5925 and 5950. Near term support for the SPX is at 2469 and 2462. Near term resistance is at 2490 and 2500.
Europe is lower in early trade Wednesday, while U.S. Futures are moderately lower in the premarket. In terms of economic reports on tap for today, we’ll see Productivity and Costs at 8:30am, Wholesale Trade at 10:00am, and the EIA Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $0.39 (-0.18%) in premarket trading Wednesday. Year-to-date, DIA has gained 13.01%, versus a 11.64% 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.