Market technician Dave Chojnacki of StreetOne Technical Analysis takes a deep dive into the underlying technicals for the major U.S. averages, which are suddenly improving by the day.
Equities got off to a good start on Tuesday, as Consumer Confidence came in slightly better than expected. Big Techs and Semi’s made a rebound after their recent bloodbath. The FANG stocks, which have been beaten down, were strong except for Amazon.com Inc (NASDAQ:AMZN). AMZN continued its fall giving up 0.5%. Regardless, the NDX had a strong gain in the session. Small-caps also had a good day, with the iShares Russell 2000 (NYSE:IWM) gaining 2% on the day. The DJIA and S&P 500 also had significant gains and finished strong. The 10YR turned to the upside, ending at 3.11.
At the close on Tuesday, the Dow Jones Industrial Average added 1.7%, the S&P 500 gained 1.5%, and the NDX moved up 1.4%. Breadth was decidedly positive, 2 to 1, on above average volume. ROC(10)’s declined in the session, with the NDX crossing back into negative territory. The DJIA and S&P 500 remained in negative territory. RSI’s moved higher, with the DJIA now leading at 40.5. The S&P 500 ended the day at 36.5 and the NDX at 37.6. All three major indices remain with their MACD below signal. The ARMS index ended the day at 0.64, a fairly bullish reading at the close.
The major indices bounced to the upside on Tuesday after testing levels they haven’t seen since last spring. They remain with their technical bias to the downside, but yesterday’s strong session was a boost for near term strength. All three major averages remain below their 200D-SMA. The major averages remain below their 50% retrace level.
The DJIA ended at 24874, closing near its high of the session. Its lower Bollinger Band® sits at 24137. It is below its 200D-SMA of 25136. The NDX closed at 6810, below its 200D-SMA of 7066. Its lower Bollinger Band® is now at 6659. The S&P 500 closed at 2682, below its 200D-SMA of 2765. The S&P 500 lower Bollinger Band® is now at 2608. The VIX finished at 23.35, down 5.4%.
Near term support for the NDX is at 6574 and 6500. Near term resistance is at 7000 and 7066. Near term support for the S&P 500 is at 2603 and 2553. Near term resistance is at 2700 and 2725.
Europe is higher in early trade. US Futures are significantly higher premarket. Major economic reports on tap today include ADP (NASDAQ:ADP) Employment at 8:15am, Employment Cost Index at 8:30am, and Chicago PMI at 9:45am.
The SPDR Dow Jones Industrial Average (NYSE:DIA) rose $1.87 (+0.75%) in premarket trading Wednesday. Year-to-date, DIA has gained 1.37%, versus a 0.74% 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 #4 of 82 ETFs in the Large Cap Value ETFs category.