Market technician Dave Chojnacki of Street One Financial kicks off the trading week with a deep look at the major U.S. indexes and updates the technical levels investors should focus on.
Last week, we saw bond yields rise and equities making new highs. The major indices stayed in negative territory for most of Friday -- until the last half-hour. A last-minute spike left equities just slightly in the black. At the close, the Dow Jones Industrial Average was up 2.7 points, the S&P 500 inched up 1.2 points and the Nasdaq gained 10.2 points.
Breadth was slightly higher on Friday, on below-average volume. ROC(10s) were mixed, with the DJIA going lower and the NDX and SPX advancing. RSI’s remain in the lower 70s and in slightly overbought levels. The ARMS Index ended at a slightly bullish 0.79.
For the week, the DJIA was up 0.8%, the SPX gained 0.6% and the NDX added 0.5%. The VIX was down 7.2% on Friday, and off 4.4% for the week.
Long term, the upside bias continues with more new highs in the major indices last week. After hitting new highs mid-week, the averages were fairly flat the last few days. The major averages are comfortably above their 200D-SMA’s: DJIA-18816, SPX-2187, NDX-4812.
Fifth-Wave Rally
Equities appear to be in the fifth wave of a rally, which began on November 7. Short term, the bias remains to the upside with the SPX and NDX above their 50% retracement levels of 2240 and 5025, respectively. Near term, the averages may find some resistance near their Bollinger Band tops, which are SPX-2407 and NDX-5433. We may also see the SPX pull back to fill a gap at 2367. Near term critical support is at the 20D-SMA of SPX-2343 and NDX 5289.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.31 (-0.15%) in premarket trading Monday. Year-to-date, DIA has gained 6.28%, versus a 6.66% 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 #5 of 75 ETFs in the Large Cap Value ETFs category.