Market technician Dave Chojnacki of Street One Financial recaps a ho-hum day for equities on Tuesday and updates the important technical indicators to consider for the major averages, which remain overbought at current levels.
Good Housing Start numbers did little to help equities at the open on Tuesday. The major indices were getting a bit overbought in recent sessions.
The averages moved lower in early trading and several attempts to go positive failed. The big Techs were selling off the hardest, and dragging down the Nasdaq 100 with it. The House passed the Tax Reform bill, but equities continued their decline. It may have been a case of “sell the news,” after “buying the rumor” for so many prior session.
The averages ended the day with small losses and maintained their near term strength. At the close, the Dow Jones Industrial Average (DJIA) gave up just 0.15%, the S&P 500 (SPX) fell 0.32%, and the NDX lost 0.5%. Breadth was decidedly negative, 2 to 1, on average volume. ROC(10)’s were mixed, with the DJIA and SPX advancing and the NDX declining.
RSI’s moved lower, but the DJIA and SPX remained in overbought territory. The DJIA ended at 77.1 and the SPX at 70.7. The NDX ended at 65. All three major indices are now with their MACD above signal. The ARMS index ended at 0.98, a nearly neutral reading.
The major indices ended their string of record highs and consolidated some of the recent gains. The sell-off was orderly and healthy. It was also broad, as just about every sector moved lower. The iShares Russell 2000 (NYSE:IWM) (Russell 2000) gave up 0.79%, indicating the wide range of losses.
The DJIA closed at 24754, and traded as low as 24715. It remains poised to hit the 25000 level. The DJIA 20D-SMA sits at 24193. The NDX closed at 6480 and traded as high as 6510. Its upper Bollinger Band® is at 6506. The NDX remains above its 20D-SMA of 6376.
The SPX closed at 2681 and traded at its recent intraday high of 2694 in the session. Its upper Bollinger Band® is at 2694. Its 20D-SMA is now at 2640. The VIX finished up 5.2% at 10.03.
Near term support for the NDX is at 6475 and 6450. Near term resistance is at 6500 and 6522. Near term support for the SPX is at 2675 and 2650. Near term resistance is at 2694 and 2700.
Europe is mixed in early trade Wednesday, while U.S. Futures are pointing higher premarket. Major economic reports on tap today include Existing Home Sales at 10:00am and the EIA Oil Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.82 (+0.33%) in premarket trading Wednesday. Year-to-date, DIA has gained 27.80%, versus a 21.85% 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 80 ETFs in the Large Cap Value ETFs category.