Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a deep look at Friday’s market action and updates the important technical indicators for investors and traders to focus on.
The major indices continued their recent sell-off at the market open on Friday. Consumer Sentiment remained high at 99.7, and once again, the S&P 500 (SPX) traded just below its 100D-SMA before finding support. As it reversed to the upside, the rest of the market followed.
The major indices continued to rally for the remainder of the session, and the Nasdaq 100 (NDX) and SPX ended in positive territory. At the close on Friday, the Dow Jones Industrial Average (DJIA) slipped 70.9 points, the SPX added 0.5%, and the NDX up 0.9%. Breadth was positive, 1.8 to 1, on average volume.
RSI’s were fairly flat, with the NDX the strongest at 52.9. The DJIA and SPX remain in the low to mid 40’s. ROC(10)’s are positive for the NDX and negative for the DJIA and SPX. The ARMS Index ended at 0.74, a bullish reading. For the week, the DJIA was down 3%, the SPX fell 2.5%, and the NDX gave up 1.2%. The VIX fell 12.8% on Friday to 19.59. For the week, the VIX was up 18.7%. A light week coming up for economic reports, but we get the all-important Employment Report on Friday.
Long term, although the major averages were down last week, they did not challenge the recent lows or their one year trend-line support. The one year trend-line support sits at: DJIA-23500, SPX-2580, NDX-6350. All three major averages remain comfortably above their 200D-SMA’s. Short term, we see some weakness in the DJIA and SPX, as they fell below their 50D-SMA’s of 25275 and 2736, respectively. As noted earlier the SPX traded just below its 100D-SMA of 2666 on Friday, but managed to close above.
Near term, Friday’s afternoon action attempted to reverse the earlier week’s downturn. The NDX is the only major index above its 20D-SMA and 50% retrace. The SPX closed just 1 point below its 38% retrace of 2692.
Europe is higher in early trade Monday, and U.S. Futures are pointing slightly lower in the premarket. Major economic reports on tap today include PMI Services at 9:45am and ISM Non-Mfg. Index at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF fell $0.40 (-0.16%) in premarket trading Monday. Year-to-date, DIA has declined -0.82%, versus a 0.83% 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 80 ETFs in the Large Cap Value ETFs category.