Market technician Dave Chojnacki of Street One Financial examines Wednesday’s mixed market action and previews Thursday’s session with an update of the important technical indicators for U.S. stocks.
The major indices opened higher on Wednesday, continuing the two-day rally. IBM (NYSE:IBM) disappointed in their Q1 Earnings report and this caused the stock to fall significantly at the open. IBM continued lower during the session and fell 7.5%. This put pressure on the Dow Jones Industrial Average (DJIA), moving it lower during the session. By the end of the day, IBM had pushed the DJIA to a slight loss. The Nasdaq 100 (NDX) and the S&P 500 (SPX) held on to small gains at the final bell. Amazon.com (NASDAQ:AMZN) was up 1.6%, helping the NDX to finish in the black.
At the close, the DJIA slipped 0.16%, the SPX inched up 2.25 points, and the NDX added 0.25%. Breadth was slightly positive, 1.2 to 1, on light volume. ROC(10)’s declined in the session, however, all three major averages remained in positive territory.
RSI’s were mixed in the session. The NDX moved higher and leads the major indices at 56.8. The DJIA slipped to 54.4 and the SPX rose to 55.6. All three major indices continue with their MACD above signal. The ARMS index ended the day at 0.82, a bullish reading.
After two strong sessions this week, the major averages took a bit of breather on Wednesday. As we noted earlier, IBM had a major impact on the DJIA. Once again, we see that volume was missing, for the third time this week. Energy and Materials were the best performers in the session.
The DJIA closed at 24748, holding above its 50D-SMA of 24614. The 50D should provide near term support. The next near term resistance level for the DJIA is at 25449. The SPX closed at 2708. It remains above its 50D-SMA of 2687. The SPX developed a ‘Doji’ candlestick in the session, signifying the indecision in the session. The NDX ended at 6833 and traded as high as 6856. The NDX held its 50-SMA of 6733. It also developed a ‘Doji’ candlestick in the session. The VIX ended at 15.60, up 2.3% in the session.
Near term support for the NDX is at 6750 and 6733. Near term resistance is at 6850 and 6950. Near term support for the SPX is at 2687 and 2650. Near term critical resistance is at 2741 and 2750.
Europe is trading mixed in early trade Thursday, while U.S. Futures are pointing slightly higher in the premarket. Major economic reports on tap today include Jobless Claims at 8:30am, Philly Fed Survey at 8:30am, Leading Inidcators at 10:00am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.10 (+0.04%) in premarket trading Thursday. Year-to-date, DIA has declined 0.00%, versus a 1.32% 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.