Technical analyst Dave Chojnacki of Street One Financial recaps Monday’s bullish trading session and looks ahead to what the rest of the week may hold for the markets from a technical perspective.
Good Empire Manufacturing numbers set the stage for equities to open the session and week on Monday to the upside. The major indices quickly lost upside momentum and fell through the morning hours.
Stocks got a bid in the PM, as once again, Techs have been catching up to the rest of the market, and pushing the Nasdaq 100 (NDX) higher. All three major averages hit new highs during the session and closed at new highs. Volume was not convincing and breadth was slightly negative. Small caps also continued to consolidate.
At the close, the Dow Jones Industrial Average (DJIA) was up 0.37%, the S&P 500 (SPX) inched up 4.4 points, and the NDX gained 0.36%. Breadth was slightly negative, on light volume. ROC(10)’s were mixed, with the DJIA and SPX declining. This indicates the waning momentum in these indices.
The NDX advanced in the session as all three major indices remained in positive territory. RSI’s moved up in the session, with the DJIA the strongest at 81. The NDX finished at 69.4 and the SPX at 73.9. MACD’s remain above signal for all three major indices. The ARMS index ended at 1.01, a neutral reading.
All three major indices made new highs in the session, on light volume and negative breadth. This is a bit concerning, as we have noted a slowing of momentum in the last several sessions. We won’t put too much weight on yesterday’s session, since we continue to have slow Mondays as of late.
The DJIA closed at 22956, just below its upper Bollinger Band® of 23041. Dow Transports were lower for the 2nd straight session, not confirming the Dow high. The NDX made a new high for the second straight session, closing at 6114. Its 20D-SMA is now at 6000. Its upper Bollinger Band is at 6140. The SPX closed at 2557, and traded as high as 2559.
The VIX added 0.06 of a point to 9.91.
Near term support for the NDX is at 6100 and 6075. Near term resistance is at 6125 and 6140. Near term support for the SPX is at 2550 and 2537. Near term resistance is at 2562 and 2572.
Europe is higher in early trade Tuesday, while U.S. Futures are mixed in the premarket. Major economic reports on tap today include Import/Export Prices at 8:30am, Industrial Production at 9:15am, and Housing Market Index at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.3 (+0.13%) in premarket trading Tuesday. Year-to-date, DIA has gained 17.91%, versus a 15.26% 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 #4 of 75 ETFs in the Large Cap Value ETFs category.