Market technician Dave Chojnacki of StreetOne Technical Analysis recaps Wednesday’s big market rally and updates the important technical levels to watch for the major U.S. averages.
Equities opened higher on Wednesday on mixed economic numbers. After moving sideways through most of the morning hours, they began to gain momentum late morning and moved higher through the remainder of the day. Improving trade numbers added fuel to the market.
This time, the Dow Jones Industrial Average (Dow) which has lagged recently was the leader in the session. It finally joined the other major indices moving above its 50% retrace level of 25074. The NASDAQ 100 (NDX) continued its run and made new closing and intraday highs. The S&P 500 (SPX) ended the day with a moderate gain. The 10YR moved higher finishing at 2.98, remaining under the 3 handle.
At the close, the Dow moved up 1.4%, the SPX added 0.86%, and the NDX tacked on 0.6%. Breadth was positive, 1.8 to 1, on average volume. ROC(10)’s advanced, with the Dow crossing back into positive territory. The NDX and SPX remain in positive territory.
RSI’s moved higher, with the NDX moving into overbought territory at 72.7. The Dow is now at 60.7 and the SPX at 63.7. The Dow MACD crossed back over signal, joining the SPX and NDX. The ARMS index ended the day at 0.69, a bullish reading.
As mentioned earlier, the Dow finally moved above the 50% retrace level of 25074. The Dow closed at 25146, its high of the day. It continues above its 20D-SMA of 24752. If the Dow can hold above the 50% level, it will confirm the short term positive bias of all three major indices.
The SPX ended the day at 2772, its high of the day. It remains above its 20D-SMA of 2725, and further above its recent tight trading range. The next critical resistance is at 2800. The NDX closed at 7210, just 2 points below its high of the day. It recorded new closing and intraday highs of 7210 and 7212. It remains comfortably above its 20D-SMA of 6974. IWM (iShares Russell 2000) continues with new record highs, exhibiting the strength in the small cap sector. The VIX finished down 6.1% to 11.64.
Near term support for the NDX is at 7200 and 7140. Near term resistance is at 7250 and 7275. Near term support for the SPX is at 2750 and 2725. Near term critical resistance is at 2788 and 2800.
Europe is higher in early trade Thursday, and U.S. Futures are higher in the premarket. Major economic reports on tap today include Jobless Claims at 8:30am at EIA NatGas Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $0.74 (+0.29%) in premarket trading Thursday. Year-to-date, DIA has gained 2.52%, versus a 4.37% 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.