Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with an in-depth look at the underlying technicals for the major U.S. indices, which improved last week despite a down day on Friday.
The market opened higher on Friday, but quickly reversed direction. Geopolitical issues were in the forefront again and investors were keeping their money close to their vests going into the weekend. By the end of the day, the major indices ended with small to moderate losses. The Dow Jones Industrial Average (DJIA) was the biggest loser on the day.
For the week, the trade was choppy, but the averages were able to finish in the black. On Friday, the DJIA fell 0.5%, the S&P 500 (SPX) declined 0.29%, and the Nasdaq 100 (NDX) lost 0.42%. Breadth was slightly negative, 1.4 to 1, on light volume. ROC(10)’s declined in the session, with all three major averages remaining in positive territory.
RSI’s moved slightly lower, with the DJIA the strongest at 49.5. The SPX ended at 48.8 and the NDX at 48.6. All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.08, a neutral reading.
It was a decent week for equities as near term technicals improved on several levels. For the week, the major averages ended moderately higher: DJIA-+1.7%, SPX-+1.9%, NDX-+3%. The DJIA closed at 24360 on Friday, trading between its 20D-SMA (24213) and 50D-SMA (24653). Near term critical support is at 23509, just below its 200D-SMA of 23550. Critical resistance is at 23622 and its 50D-SMA of 24653.
The SPX also traded between its 20D-SMA (2649) and 50D-SMA (2689) on Friday. The SPX closed at 2656 holding just above its 20D. Critical near term support is at 2573 and its 200D-SMA of 2599. Critical near term resistance is at its 50D-SMA of 2689.
The NDX closed at 6628, just 2 points above its 20D-SMA of 6626. Near term critical support is at 6326 and at its 200D-SMA of 6307. Near term critical resistance is at 6793 and its 50D-SMA of 6730.
The VIX fell 5.8% on Friday to finish at 17.41. For the week, the VIX was down 18.9%.
It’ll be a relatively light week for economic reports, but we continue to see Q1 Earnings reports begin to trickle in.
Europe is trading mixed in early action on Monday, while U.S. Futures are pointing higher in the premarket. Major economic reports on tap today include Retail Sales at 8:30am, Empire State Mfg. at 8:30am, Business Inventories at 8:30am, and the Housing Market Index at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $1.36 (+0.56%) in premarket trading Monday. Year-to-date, DIA has declined -1.54%, versus a -0.64% rise in the benchmark S&P 500 index during the same period.
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