Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with a recap of Friday’s market action and an update on the underlying technicals for the major US averages.
The CPI came in at +0.02%, as expected, but the big news on Friday was the sanctions on Turkey, which caused the lira to take a big hit and scared markets worldwide. The major indices opened lower on Friday and then traded flat through the morning hours. Another sell-off early PM lasted until the final hour, when the averages got a little bump to the upside.
The major indices ended the day with moderate losses and a pick-up in volume. For the week, the major averages closed with little change. The Dow Jones Industrial Average (DJIA) was off 0.5% for the week, the biggest loser. The S&P 500 (SPX) gave just up 0.02% and the Nasdaq 100 (NDX) slipped just 13 points. On Friday, the United States 10-Year fell to 2.86%.
At the close on Friday, the DJIA lost 0.77%, the SPX was down 0.71%, and the NDX fell 0.79%. Breadth was decidedly negative, on below average volume. The volume did pick-up from the anemic Wednesday/Thursday action. ROC(10)’s were mixed, with the DJIA and SPX declining, and the NDX advancing. The NDX and SPX remained in positive territory, while the DJIA is in negative territory. RSI’s declined, with the SPX leading at 56.4. The NDX ended at 55.9 and the DJIA at 53.3. The MACD’s for the DJIA and SPX crossed back below signal. The NDX remains above signal. The ARMS index ended the day at 1.39, a slightly bearish reading at the close.
The DJIA and SPX fell for the last 2 sessions, while the NDX was down in the last two. On Friday, the NDX and SPX both found support at their 20D-SMA’s. What was somewhat troubling, was the DJIA and SPX MACD’S crossing below signal.
The NDX was the big loser in the session closing at 7408. It is 100 points below its all-time closing high of 7508. On Friday, it traded as low as 7382, just above its 20D-SMA of 7377. The NDX has additional support at its 50D-SMA of 7257. The DJIA closed at 25313, closing just below its 20D-SMA of 25328. The DJIA has support at its 50D-SMA of 24975. The SPX found support at its 20D-SMA on Friday, and ended 8 points above at 2833. Its MACD crossed below signal, which may signal a little near term weakness. The short term bias for equities continues to the upside, however, we may see a little near term weakness. The VIX finished at 13.16 up 16.7%. For the week, the VIX was up 13%.
Near term support for the NDX is at 7377 and 7257. Near term resistance is at 7475 and 7508. Near term support for the SPX is at 2825 and 2812. Near term critical resistance is at 2850 and 2862.
Europe is lower in early trade Monday, and US Futures are lower in the premarket. There are no major economic reports scheduled for today.
The SPDR Dow Jones Industrial Average (NYSE:DIA) fell $1.35 (-0.53%) in premarket trading Monday. Year-to-date, DIA has gained 3.25%, versus a 6.53% 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.