Market technician Dave Chojnacki of Street One Financial wraps up the trading week with a look at Thursday’s wild action and a preview of Friday’s trading prospects, as the U.S. averages look to establish a firm direction for the first time in months.
The roller coaster market continues. Equities opened the day higher on Thursday, as Initial Claims came in where they were expected. Geopolitical issues seemed to calm somewhat, and stocks rallied. The major averages were choppy during the session, but ended strong.
Industrials and Materials were strong and pushed the Dow Jones Industrial Average (DJIA) to be the best gainer. By the end of the session all three major averages ended with significant gains as near term technical improved.
At the close, the DJIA was up 1.2%, the S&P 500 (SPX) added 0.83%, and the Nasdaq 100 (NDX) gained 1.1%. Breadth was slightly positive, 1.2 to 1, on below average volume. ROC(10)s advanced in the session, with all three major averages in positive territory.
RSI’s moved higher, with the DJIA the strongest at 51.2. The SPX ended at 49.8 and the NDX at 49.7. We saw the NDX MACD join the DJIA and SPX above signal. This is positive near term. The ARMS index ended the day at 0.86, a bullish reading.
While the action continues choppy this week, yesterday saw some major improvements in near term technicals. The NDX and SPX crossed above their 20D-SMA’s on Thursday. We also saw the NDX MACD cross above signal improving technicals. The DJIA closed at 24483, continuing above its 20D-SMA (24239). It remains below its 50D-SMA of 24689.
The SPX moved above its 20D-SMA (2653), closing at 2663. The SPX remains below its 50D-SMA of 2693. The NDX MACD moved above signal on Thursday. The NDX closed above its 20D-SMA(6646), ending at 6656. Near term technical bias is beginning to turn to the upside.
In another bullish development, the VIX fell 8.6% to finish at 18.49, finally moving below the 20 handle.
Near term support for the NDX is at 6646 and 6600. Near term resistance is at 6700 and 6736. Near term support for the SPX is at 2653 and 2625. Near term resistance is at 2675 and 2693.
Europe is trading higher in early action Friday, while U.S. Futures are pointing higher in the premarket. Major economic reports on tap today include Consumer Sentiment at 10:00am and JOLTS job openings at 10:00am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF rose $0.80 (+0.33%) in premarket trading Friday. Year-to-date, DIA has declined -1.04%, versus a -0.35% 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.