Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with a deep dive into the underlying technicals for the major U.S. averages.
Economic numbers on Friday came in near forecast. Consumer Sentiment came in at 100.1, when it was forecasted at 100.5. Equities opened slightly lower, but then rose through the morning hours. The afternoon saw the major indices slide lower and by the final bell they were little changed and mixed.
The big news on Friday was the SEC investigation into Tesla (NASDAQ:TSLA). TESLA was down nearly 14% by the close. Last week we also saw the FED raise rates, which had the 10YR moving higher and ending the week at 3.06%. For the week, the Dow was down 1%, the NDX off 1.2%, and the SPX falling 0.5%.
At the close on Friday, the Dow added 18.3 points, the SPX gave up just 0.02 of a point, and the NDX inched down 1.9 points. Breadth was slightly positive, 1.2 to 1, on average volume. ROC(10)’s were mixed in the session, with the SPX the only one declining. All three major indices remained in positive territory. RSI’s were also mixed with the DJIA moving higher to 62.1 and leading the major indices. The NDX slipped to 60.9 and the SPX fell to 58.9. The Dow MACD crossed below signal, joining the SPX. The NDX MACD remained above signal. The ARMS ended the day at 1.22, slightly bearish.
Last week’s pullback was reflected in the Dow and SPX having their MACD cross below signal. While this is a cautionary signal, all three remained above the important near term technical support level of their 20D-SMA. The NDX closed at 7627 just 33 points below its record closing high of 7660. It traded as high as 7664 on Friday, a few points above the record close. Its 20D-SMA is now at 7534. It remains comfortably above its 50D-SMA of 7464. The NDX continues above a 5 month trend-line which sits at 7500. The DJIA ended on Friday at 26458, holding above its 20D-SMA of 26219. It continues above the 50D-SMA of 25807.
The SPX closed at 2913, little changed from the prior session. It traded as high as 2920 in the session and remains within striking distance of its record high of 2930. Its 20D-SMA is now at 2901. The VIX fell 2.3% to 12.12. Volatility continues to remain low. The VIX has been in a very narrow range since the beginning of July.
Near term support for the NDX is at 7534 and 7500. Near term resistance is at 7660 and 7691. Near term support for the SPX is at 2901 and 2888. Near term resistance is at 2930 and 2940.
Europe is higher in early trade, and US Futures are significantly higher premarket after new trade deal. Major economic reports due out today include ISM Manufacturing Index at 10:00am and Construction Spending also at 10:00am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (DIA) rose $2.02 (+0.76%) in premarket trading Monday. Year-to-date, DIA has gained 7.77%, versus a 9.38% rise in the benchmark S&P 500 index during the same period.