Technical analyst Dave Chojnacki of Street One Financial recaps Wednesday’s mixed market action, which saw mega cap stocks sell off hard, but the Dow still closed at a fresh all-time high, and previews Thursday’s session with an update of the important underlying market technicals.
A good GDP report had the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) moving higher at the open, continuing their rally from Tuesday. The Nasdaq 100 (NDX) didn’t join in the fun, as Techs, especially the big name Techs, were being crucified.
It was a bad day for the ‘FANG’ stocks, as many had multiple percentage losses. There was no particular news on Techs to drag them lower, but a widespread rotation into Financials continued from the previous session. Investors were also piling into the Transportation sector, pushing the Dow Transports to a new high and confirming the Dow Theory.
The day ended with the DJIA at new highs, a big loss for the NDX and a slight loss for the SPX. At the close, the DJIA added 0.44%, the SPX slipped 0.97 of a point, and the NDX fell 1.7%. Breadth was slightly negative, on above average volume. ROC(10)’s were mixed with the DJIA and SPX advancing and the NDX declining.
RSI’s were little changed for the DJIA and SPX, with the DJIA leading now at 73.7. The NDX fell nearly 20 points to 53.6. The DJIA had its MACD cross above signal, while the NDX fell below signal. The SPX remained above signal. The ARMS index ended extremely bullish at 0.60.
It was tale of two markets yesterday, as Financials and Transports pushed the DJIA to record highs. Meanwhile, investors were rotating out of big Techs, leaving the NDX with a big loss on the day.
The DJIA closed at 23940 and traded as high as 23959. Its 20D-SMA is now at 23527. The NDX closed at 6311, below its 20D-SMA support of 6326. Its next level of critical near term support is 6227. The SPX closed at 2626, below Tuesday’s record high. It did record a new intraday high of 2634. It remains above its 20D-SMA of 2590. The VIX finished up 6.6% to 10.70.
Near term support for the NDX is at 6300 and 6250. Near term resistance is at 6326 and 6350. Near term support for the SPX is at 2625 and 2612. Near term resistance is at 2634, 2637 and 2650.
Europe is higher in early trade Thursday, and U.S. Futures are pointing higher in the premarket. Major economic reports on tap today include Jobless Claims at 8:30am, Personal Income at 8:30am, Chicago PMI at 9:45am, and EIA Natural Gas at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.68 (+0.28%) in premarket trading Thursday. Year-to-date, DIA has gained 23.03%, versus a 18.61% 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 80 ETFs in the Large Cap Value ETFs category.