Technical analyst Dave Chojnacki of Street One Financial examines Wednesday’s big day for the Dow, which was fueled almost entirely by a huge gain from one mega cap technology stock, and remains cautious in the near term due to overbought conditions and waning momentum.
The Market gapped up at the open on good earnings news from IBM (NYSE:IBM) on Wednesday morning. Weak Housing Numbers put a damper on the surge, however, and held the indices back.
Interestingly, the data didn’t hold back the Dow Jones Industrial Average, which was getting a huge push from IBM, which finished up 8.8% on the day. IBM was responsible for about 90 points in the DJIA rally, which helped it close at a new record high.
The Nasdaq 100 (NDX) slipped a few points in the session, while the S&P 500 (SPX) was up a few points for new highs. The DJIA and SPX made new highs for the 4th straight session, in fact. The NDX made a new intraday high, but couldn’t hold it into the close.
At the close, the DJIA was up 0.70%, the SPX inched up 1.9 points, and the NDX fell 8.2 points. Breadth was slightly positive, on below average volume. ROC(10)’s were mixed, with the DJIA advancing and the SPX and NDX declining. All three major indices remain in positive territory.
RSI’s were mixed, with the DJIA moving up to 85.3, the strongest index. The SPX and NDX inched down to 75.1 and 68.2, respectively. MACD’s remain above signal for all three major indices. The ARMS index ended at 1.09, a slightly negative reading.
As noted earlier, the DJIA and SPX made new highs again. IBM helped pushed the DJIA to a record close of 23157, and an intraday high of 23172. Its upper Bollinger Band® is now at 23176. It remains above its 20D-SMA of 22655.
The SPX closed at a record 2561, while trading as high as 2564 in the session. Its 20D-SMA is at 2533. Its upper Bollinger Band sits at 2579.
The NDX slipped to a close of 6114. It remains comfortably above its 20D-SMA of 6014.
Caution is warranted here, noted with overbought levels and slowing momentum. The VIX fell 2.3% to finish at 10.07.
Near term support for the NDX is at 6100 and 6075. Near term resistance is at 6129 and 6140. Near term support for the SPX is at 2550 and 2537. Near term resistance is at 2564 and 2579.
Europe is lower in early trade Thursday, and U.S. Futures are significantly lower in the premarket. On the economic data front today, we’ll see Jobless Claims at 8:30am, the Philly Fed at 8:30am, Leading Indicators at 10:00am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF fell $0.81 (-0.35%) in premarket trading Thursday. Year-to-date, DIA has gained 18.94%, versus a 15.46% 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 76 ETFs in the Large Cap Value ETFs category.