Market technician Dave Chojnacki of Street One Financial recaps Monday’s rally that saw the U.S. markets hit new highs, despite a late-day swoon, and previews Tuesday’s action with an update of the important technical levels to watch in the major averages.
The major averages got off to a good start on Monday, with the S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) moving quickly to new highs. Disappointing Housing numbers at 10AM had equities reversing and beginning a move to the downside.
Volume and action was typical of a summer Monday, however, we are in the middle of September. Equities moved sideways till a precipitous drop at 2PM, which wiped most of the earlier gains away. The averages did finally find support and tried to recover the dip. The major indices ended mixed, as we continue to see some of the recent upside momentum slow. The DJIA and SPX did make new highs in the session, at least.
At the close, the DJIA added 0.28%, the SPX inched up 3.6 points, and the Nasdaq 100 (NDX) slipped 0.11%. Breadth was positive, 1.3 to 1, on slightly below average volume. ROC(10)’s were mixed, with the DJIA advancing and the NDX and SPX declining. The NDX is the only index in negative territory. RSI’s were also mixed, with the DJIA advancing to 69.8 and now the strongest. The NDX finished at 57.1 and the SPX at 66.1.
All three major averages remain with their MACD above signal. The ARMS index ended the day at 0.91 a slightly bullish reading.
It was another big day for the DJIA and SPX, as they made new all-time highs. The DJIA closed at 22331, and as high as 22355. It closed just above its upper Bollinger Band® of 22303. The DJIA has support at its 20D-SMA of 21939.
The SPX closed at 2503 and traded as high as 2508. Its 20D-SMA is at 2466. It closed just below its upper Bollinger Band of 2512. The NDX slipped in the session, which depicts some of the momentum we see slowing. It remains comfortably above its 20D-SMA of 5922 however.
The VIX was off 0.02 of a point to 10.15.
Near term support for the NDX is at 5975 and 5950. Near term resistance is at 5988 and 6000. Near term support for the SPX is at 2500 and 2475. Near term resistance is at 2512 and 2525.
Europe is mixed in early trade Tuesday, while U.S. Futures are slightly higher in the premarket. On the economic data front today, we’ll see Housing Starts at 8:30am and Import/ExportPrices also at 8:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.26 (+0.12%) in premarket trading Tuesday. Year-to-date, DIA has gained 14.68%, versus a 12.75% 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.