Market technician Dave Chojnacki of Street One Financial recaps Monday’s big equities rally which has brought the major U.S. averages back within striking distance of their all-time highs as we approach the end of February.
The major indices got off to a good start on Monday morning, despite the fact that New Home Sales were disappointing. Interest rates continue to be the focus and we had the 10-Year Treasury Note finish at 2.86% on Monday. This helped equities rally through the day and finish with strong gains.
The Dow Jones Industrial Average was the best performer of the big three, as Industrials and Financials had a strong day. FAANG stocks continue to be strong, pushing the Nasdaq 100 to significant gains as well.
At the close, the DJIA was up 1.58%, the S&P 500 added 1.18%, and the NDX gained 1.34%. Breadth was positive, 2 to 1, on below average volume. ROC(10)s were mixed with the DJIA advancing to the upside and the NDX and SPX declining. All three remain in positive territory.
RSI’s moved higher, with the NDX leading at 63.1. The DJIA ended at 57.5 and the SPX at 57.8. The major averages remain with their MACD’s above signal, a positive near term technical signal. The ARMS index ended the day at 0.77, a bullish reading.
The major indices have now been up for the last three sessions, continuing to bounce off last week’s FOMC lows. All three averages have retraced more than the Fibonacci 61% from their early February lows.
The DJIA closed the day at 25709, continuing to be above its 20D and 50D moving averages. The DJIA 50D-SMA is at 25254. The SPX ended the day at 2779, a point below its high of the session. It put more distance from its 50D-SMA, which is now at 2733.
The NDX ended at 6989, which was its high of the session. The NDX continues to be the strongest index near term. Its 20D-SMA is now at 6724. The NDX now closes in on its January high of 7022.
The VIX fell again, down 4.1% to 15.80. The VIX is now moving back to its usual low volatility levels.
Near term support for the NDX is at 6950 and 6900. Near term resistance is at 7000 and 7022. Near term support for the SPX is at 2750 and 2733. Near term resistance is at 2800 and 2812.
Europe is lower in early trade Tuesday, while U.S. Futures are mixed in the premarket. We’ll see several major economic reports released today, including Durable Goods at 8:30am, International Trade at 8:30am, Wholesale Inventories at 8:30am, FHFA Housing Prices at 9:00am, and Consumer Confidence at 10:00am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.41 (+0.16%) in premarket trading Tuesday. Year-to-date, DIA has gained 3.86%, versus a 4.14% 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 #1 of 79 ETFs in the Large Cap Value ETFs category.