Market technician Dave Chojnacki of Street One Financial examines Wednesday’s mild market pullback and updates the key technical indicators for investors to focus on as we progress through equities first volatility-filled period in several years.
Equities opened flat to slightly lower on Wednesday, but quickly moved to the upside. The major indices continued moving higher through the morning hours and had gains of nearly 1% at one point.
Interest rates continued to rise yesterday, pushing the 10-year to 2.84%, and the Senate passed a spending bill with increases that concerned investors. Both of these issues helped to reverse the market and erase all of the earlier gains.
Techs were hit the hardest, reflecting on the Nasdaq 100 (NDX). Meanwhile, Boeing (NYSE:BA) had a good day and kept the Dow Jones Industrial Average (DJIA) losses to a minimum (note that BA is the Dow’s largest component).
At the close, the DJIA slipped 19.4 points, the S&P 500 (SPX) fell 0.5%, and the NDX lost 1.2%. Breadth was slightly positive, on average volume. ROC(10)’s declined across the board and remained in negative territory.
RSI’s moved lower, with the NDX continuing to lead at 42.1. The DJIA RSI finished at 40.4, and the SPX at 37.4. All three major averages continue with their MACD below signal. The ARMS index ended the day at 1.43, a fairly bearish reading.
Equities opened following thru on the prior day’s strong session, but they continued their choppy trade and ended near their lows of the day. The VIX pulled back slightly to 27.73, but the volatility continues.
The DJIA closed at 24893, just below its 50D-SMA of 25085. It did hold above its 3% retracement level of 24775. The NDX ended the day at 6582, right near its low of the session. It closed just below its 50D-SMA of 6589. It held slightly above its lower Bollinger Band® of 6537. The SPX closed at 2681, its low of the session. It remained below its 50D-SMA of 2719. It did close a few points above its lower Bollinger Band® of 2674.
We see the effect of the rising interest rates in the TLT (iShares 20+ Year Treasury Bond (NASDAQ:TLT)) ETF, which fell 0.95% to 118.82.
Near term support for the NDX is at 6550 and 6500. Near term resistance is at 6600 and 6650. Near term support for the SPX is at 2675 and 2650. Near term resistance is at 2700 and 2719.
Europe is significantly lower in early trade Thursday, while U.S. futures are pointing lower in the premarket.
The SPDR Dow Jones Industrial Average (NYSE:DIA) fell $0.46 (-0.18%) in premarket trading Thursday. Year-to-date, DIA has gained 0.56%, versus a 0.30% 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 79 ETFs in the Large Cap Value ETFs category.