Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of Friday’s big rally for tech stocks, and updates the important technical levels to focus on as October comes to a close.
Strong earnings by the big Tech companies pushed equities to open higher on Friday. The Nasdaq 100 (NDX), which has lagged recently, got a lift from the FANG stocks. It gapped higher at the open and never looked back. Note that the FANG ETF (FNG – Advisor Shares) closed at a new high of 22.45 on Friday.
The Dow Jones Industrial Average (DJIA) was as not as strong, but a small gain by the S&P 500 (SPX) pushed it to new highs. The NDX had the biggest gain on Friday and strengthened near term technicals.
At the close, the DJIA was up 33.2 points, the SPX added 0.8%, and the NDX moved up 2.9%. Breadth was positive, 1.6 to 1, on above average volume. RSI’s moved higher, with the DJIA remaining the strongest at 78.7, and in overbought territory. The SPX is slightly overbought at 70.6 and the NDX finished at 69.6. The ARMS Index ended at 1.10, a slightly bearish reading.
For the week: the DJIA added 0.4%, the SPX gained just 6 points, and the NDX moved up 1.7%. The VIX fell 0.17 of a point for the week to finish at 9.80. A plethora of economic and earnings reports are on tap again this week.
Long term, the upside bias continues to be strong, with all three major indices making new highs last week. The DJIA has been the leader, with large cap industrials leading the way. At the end of the week, the NDX surged to new highs and the SPX inched up to new records. The major indices are comfortably above their 200D-SMA’s: DJIA +9.8%, SPX+6.7%, NDX+9.7%.
Short term bias continues to the upside, with the major averages above key technical levels. Near term, the NDX improved its technicals, with its MACD crossing back positive and ROC(10)’s moving into positive territory. The SPX is the only major index with its MACD below signal. Near term critical support is now at: DJIA-22219, SPX-2488, NDX-5839.
Europe is mixed in early trade Monday, while U.S. Futures are pointing lower in the premarket. Major economic reports on tap today include Personal Income at 8:30am and the Dallas FED at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $0.51 (-0.22%) in premarket trading Monday. Year-to-date, DIA has gained 20.33%, versus a 16.36% 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.