Market technician Dave Chojnacki of StreetOne Technical Analysis previews Wednesday’s market action with an update of the underlying technicals for the major U.S. averages.
Good economic numbers on Tuesday had equities attempting to move to the upside at the open. The Nasdaq 100 (NDX) and S&P 500 (SPX) were moving higher in the morning, while the Dow Jones Industrial Average (DJIA) lagged. Once again, Techs were the stronger sector, helping to push the NDX to another closing record high of 7166. Small-caps also continued their rally as the iShares Russell 2000 (NYSE:IWM) closed at a new high.
The DJIA and SPX were choppy during the session and moved between red and black. By the end of the session, the major indices finished mixed and little changed.
At the close, the DJIA fell 13.9 points, the SPX added just 1.9 points, and the NDX gained 0.3%. Breadth was positive, 1.5 to 1, on weak volume. ROC(10)’s declined, with the DJIA crossing back into negative territory. The NDX and SPX declined, but remain in positive territory.
RSI’s were mixed, with the NDX the strongest at 70.7. It begins to move into overbought levels. The DJIA is now at 54.3 and the SPX at 59.5. The SPX and NDX remain with their MACD above signal. The DJIA continues with its MACD below signal. The ARMS index ended the day at 1.39, a slightly bearish reading.
It was a mixed and rather lackluster trading session on very weak volume. The indecision in the session was depicted by all three major indices developing a “Doji.” In addition, a “Doji” may indicate a reversal of direction.
The DJIA closed at 24799, above its 20D-SMA of 24713. It remains below its 50% retrace level of 25074. The SPX closed at 2748, above its 20D-SMA of 2720. It remains above its 50% retrace level of 2726. The SPX broke out of a tight 16 day trading range on Monday and held that level in Tuesday’s session. A positive technical signal. The NDX ended the day at a new closing high of 7166. It continues well above its 20D-SMA of 6955. It is within striking distance of its all-time intraday high of 7186. The VIX finished down 2.6% to 12.40.
Near term support for the NDX is at 7100 and 7050. Near term resistance is at 7150 and 7186. Near term support for the SPX is at 2726 and 2720. Near term critical resistance is at 2750 and 2800.
Europe is mixed in early trade Wednesday, while U.S. Futures are higher in the premarket. Major economic reports on tap today include International Trade at 8:30am, Productivity and Costs at 8:30am, and EIA Petrol Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $1.33 (+0.54%) in premarket trading Wednesday. Year-to-date, DIA has gained 1.15%, versus a 3.50% 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.