Market technician Dave Chojnacki of Street One Financial recaps Mondays anemic stock action and looks ahead to Tuesday’s session with an update of the important underlying technicals for the major U.S. averages.
Equities opened the week and the day to the downside on Monday. Techs were doing a little better and kept pushing the Nasdaq 100 (NDX) into positive territory. There were no important economic reports, but there were leaks from the Fed that inflation remained low and that multiple rate hikes may not be needed in 2018. This would naturally be good news for equities.
The NDX and S&P 500 (SPX) marched on, to eke out a gain by the end of the day. They both ended with new record highs. The Dow Jones Industrial Average (DJIA) could not get out of negative territory, however, and ended with a small loss.
At the close, the DJIA slipped 12.8 points, the SPX added 4.5 points, and the NDX moved up 0.35%. Breadth was positive, 1.4 to 1, on average volume. ROC(10)’s were mixed with the DJIA declining and the NDX and SPX advancing. All three remain in positive territory.
RSI’s were also mixed, with the DJIA declining to 79.7, but remaining the strongest. The SPX ended at 79.0 and the NDX at 74.6. All three continue in overbought territory. All three MACD’s continue above signal. The ARMS index ended at 1.13, slightly bearish at the close.
We saw the major averages breakout of their end of the year consolidation last week. This week they started out slower, but the NDX and SPX eked out small gains to new highs. The NDX closed at 6676 and traded as high as 6680 in the session. It continues above its upper Bollinger Band® of 6649. It remains comfortably above its 20D-SMA of 6474.
The DJIA closed at 25283, above its upper Bollinger Band® of 25252. Its 20D-SMA is at 24762. It remains a bit extended.
The SPX closed at another record of 2747 and traded as high as 2748. It is above its upper Bollinger Band of 2739. Its 20D-SMA is now at 2686. The VIX added 3.2% to finish at 9.52.
Near term support for the NDX is at 6650 and 6600. Near term resistance is at 6700 and 6750. Near term support for the SPX is at 2725 and 2700. Near term resistance is at 2750 and 2762.
Europe is higher in early trade Tuesday, while U.S. Futures are pointing higher in the premarket. The only major economic report on tap today is the JOLTS jobs openings report at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.41 (+0.16%) in premarket trading Tuesday. Year-to-date, DIA has gained 2.11%, versus a 2.65% 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 80 ETFs in the Large Cap Value ETFs category.