Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with a recap of last week’s market action and an update on the underlying technicals for the major U.S. averages.
The Major indices opened higher on Friday after a good GDP number. The GDP came in at 4.1% for the 2nd Quarter. The administration believes strong numbers are sustainable. Will this have an impact on Fed tightening? Time will tell.
Equities were unable to maintain their strength and quickly reversed to the downside. Techs were getting hit the hardest as Twitter Inc (NYSE:TWTR) was getting crushed. TWTR lost 20% on Friday. The averages leveled off in the PM, but finished moderately to the down side. The Nasdaq 100 (NDX) was the biggest loser, after just setting new highs earlier in the week. The 10YR ended the day at 2.96%, slightly lower.
At the close on Friday, the Dow Jones Industrial Average (DJIA) fell 0.3%, the S&P 500 (SPX) was down 0.66%, and the NDX gave 1.4%. Breadth was negative, 2 to 1, on above average volume. ROC(10)’s declined across the board, with the NDX moving into negative territory. RSI’s moved lower, with the DJIA continuing to be the strongest at 65.5. The NDX ended at 51.4 and the SPX fell to 59.4. The NDX MACD crossed below signal, while the DJIA and SPX remain above. The ARMS index ended the day at 0.69, a fairly bullish reading at the close.
The major indices were mixed for the week, with the DJIA adding 1.5%, the NDX gave up 0.7%, and the SPX tacking on 0.6%. The NDX, after hitting new highs earlier in the week, was the biggest loser on Friday. It closed at 7296 and traded as high as 7443. The NDX closed just above its 20D-SMA of 7292. The MACD crossing below signal is a caution signal for the near term.
The DJIA ended the day at 25451, and remains above its 50% retrace level of 25074. It continues above its 20D-SMA of 24904. The SPX closed at 2818, and traded as high as 2843. It remains above its 20D-SMA of 2788 and 50D-SMA of 2761. The VIX gained 7.3% to finish at 13.03. It was little changed for the week. Volatility remains relatively low.
Near term support for the NDX is at 7292 and 7169. Near term resistance is at 7350 and 7400. Near term support for the SPX is at 2812 and 2800. Near term critical resistance is at 2850 and 2862.
Europe is mostly lower in early trade Monday, and U.S. Futures are mixed in the premarket. The only major piece of economic news out today is Pending Home Sales at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.22 (+0.09%) in premarket trading Monday. Year-to-date, DIA has gained 3.64%, versus a 5.88% 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 81 ETFs in the Large Cap Value ETFs category.