Market technician Dave Chojnacki of Street One Financial recaps Thursday’s mixed market action, which didn’t include the bounce that many investors were hoping for, and updates the key technical indicators to watch as we progress through the heart of earnings season.
The major averages opened higher on Wednesday, buoyed by a State of the Union speech that was upbeat on the future of the economy. The indices moved strongly higher early in the session, only to pullback as the PM session wore on.
The FED indicated rates could go higher (despite not raising rates this time), putting a damper on the rally. By the final bell, the major indices finished with small gains, but broke the brief string of recent losses.
The Dow Jones Industrial Average (DJIA) and Nasdaq 100 (NDX) were the stronger indices in the session. The DJIA was lifted by a strong report from Boeing (NYSE:BA), the Dow’s largest component, which was up nearly 5%.
At the close, the DJIA was up 0.28%, the S&P 500 (SPX) inched up 1.3 points, and the NDX added 0.28%. Breadth was just slightly positive, on above average volume. ROC(10)’s declined in the session, but remained in positive territory.
RSI’s inched up with the NDX continuing to lead at 69.3. The DJIA and SPX are now at 64.9 and 64.5, respectively. The SPX MACD crossed below signal, joining the DJIA. The NDX MACD remains above signal. The MACD is a good near term indicator, so we exercise caution here. The ARMS index ended at 1.07, a nearly neutral reading.
The major indices bounced off their two days of losses, but the gains were tempered by the FOMC announcement. Surprisingly, the iShares 20+ Year Treasury Bond (NASDAQ:TLT) (iShares Treasury Bond) moved back above a critical support level of 122.50. It ended at 122.73, up 0.59%.
The DJIA closed at 26149, with its 20D-SMA at 25853. The NDX closed at 6949 and traded as low as 6915. Its 20D-SMA is now at 6804. The SPX closed at 2823, and traded as low as 2813 in the session. Its 20D-SMA is at 2794. The VIX fell 8.4% to finish at 13.54.
Near term support for the NDX is at 6925 and 6900. Near term resistance is at 6950 and 6975. Near term support for the SPX is at 2812 and 2800. Near term resistance is at 2837 and 2850. Earnings reports continue today, with some key Tech names reporting, such as Amazon.com Inc (NASDAQ:AMZN), Alibaba Group Holdings Ltd (NYSE:BABA) and Alphabet Inc Class A (NASDAQ:GOOGL).
Europe is mixed in early trade Thursday, and U.S. Futures are also mixed in the premarket. Along with several key earnings reports, we also get a bevy of economic releases today, including the Challenger Report at 7:30am, Jobless Claims at 8:30am, Production and Costs at 8:30am, PMI Man. Index at 9:45am, ISM Mfg Index at 10:00am, Construction Spending at 10:00am, and finally the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF fell $0.31 (-0.12%) in premarket trading Thursday. Year-to-date, DIA has gained 5.68%, versus a 5.64% 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.