Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of last week’s bullish action and updates the important technical indicators to focus on for the major U.S. averages as we approach the end of a rocky February.
After receiving a set-back after the FOMC minutes last week, equities rallied to finish the week on a positive note. The major indices opened to the upside on Friday and momentum slowly built as the rally continued.
Techs were the big stars once again, especially the FAANG stocks, and the Nasdaq 100 was up nearly 2% in the session. The Dow Jones Industrial Average and S&P 500 (SPX) also had a good day, pushing above their 20 and 50 day moving averages.
At the close on Friday, the DJIA added 1.3%, the SPX moved up 1.6%, and the NDX spiked 1.99%. Breadth was decidedly positive, 5 to 1, on below average volume. Low volume continues.
RSI’s moved higher, with all 3 major indices in the 50’s. ROC(10)’s crossed into positive territory for the DJIA and SPX. The ARMS Index ended at 0.81, a slight bullish reading. For the week, the DJIA was up 0.3%, the SPX added 0.6%, and the NDX gained 1.8%.
The VIX fell 11.9% to 16.49. For the week, the VIX was down 15.4%.
This week will be a busy one for economic reports, including Durable Goods and Housing data. Investors are also no doubt watching rates closely, as most of the pullback has been blamed on rising resistance is at 6550 and 6591.
Long term, the major averages are back on track and moving back to challenge their January highs. They are now considerably above their 200D-SMA: DJIA-22973, SPX-2553, NDX-6135. Since the SPX tested its 200D-SMA, intraday on Feb. 9th, the major averages have reversed direction.
Short term, we had the DJIA and SPX cross back above their 50 Day moving averages of 25230 and 2730, respectively. The short term bias remains to the upside. Near term, all three major averages have retraced more than 50% of the recent correction and moved back above their 20D-SMA’s. They have now all moved above their 20D-SMA’s and we see their MACD’s cross back above signal.
Europe is higher in early trade Monday, and U.S. Futures are significantly higher in the premarket. The only major economic report due out today is New Home Sales at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $1.69 (+0.67%) in premarket trading Monday. Year-to-date, DIA has gained 2.24%, versus a 2.94% 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.