Technical analyst Dave Chojnacki of Street One Financial wraps up the trading week with a deep look at the underlying technicals for the major U.S. averages, which are seeing some divergence as of late amid a generally strong earnings season.
Earnings reports continue to be on target or slightly above estimates, and are helping to push equities higher. Initial Claims numbers were as expected yesterday, and the major averages opened mixed, as the Dow Jones Industrial Averageand S&P 500 were higher, and the Nasdaq 100 inched lower. Techs continued to lag, as big Dow and Industrial stocks continue to shine.
By the final bell, the DJIA and SPX closed with small gains, and the NDX moved slightly lower. After the bell on Thursday, Amazon.com Inc (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) all reported blowout earnings, and they traded significantly higher after hours.
At the close yesterday, the DJIA added 0.31%, the SPX inched up 3.25 points, and the NDX slipped 0.28%. Breadth was slightly positive, on average volume. ROC(10)’s were mixed in the session, with only the NDX declining. It is also the only major index in negative territory.
RSI’s inched higher for the DJIA and SPX. The DJIA continues the strongest at 78 and the SPX at 62.8. The NDX finished the day with its RSI at 50. The NDX and SPX remain with their MACD below signal, continuing the near term weakness. The DJIA remains the only major index to remain above signal. The ARMS index ended at 0.98, a nearly neutral reading.
We have now seen the indices alternate between gains and losses in the last several sessions. This type of choppy action is sometimes typical of a top, although we don’t have the additional technical signals to confirm.
The DJIA closed at 23400, below its record highs. It remains comfortably above its 20D-SMA of 22952. The NDX continues below its 20D-SMA of 6061, closing at 6037. It remains the weakest of the big three indices. The SPX closed at 2560, 8 points above its 20D-SMA of 2552. The SPX is now 15 points below its record close of 2575. The VIX added 0.62% to finish at 11.30.
Near term support for the NDX is at 6025 and 6000. Near term resistance is at 6061 and 6075. Near term support for the SPX is at 2552, 2550 and 2525. Near term resistance is at 2562 and 2575.
Europe is higher in early trade Friday, and U.S. Futures are pointing higher in the premarket as well. Earnings once again will take center stage today, with the only major economic reports on tap being GDP at 8:30am and Consumer Sentiment at 10:00am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.56 (+0.24%) in premarket trading Friday. Year-to-date, DIA has gained 20.17%, versus a 15.41% 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 76 ETFs in the Large Cap Value ETFs category.