Fed Announcement Fails To Inspire Dow Jones Industrial Average

Published 05/03/2018, 08:00 AM
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Market technician Dave Chojnacki of Street One Financial recaps Thursday’s market action, which turned bearish after the Fed announcement.

ADP numbers came in slightly lower than expected on Wednesday and despite Apple Inc (NASDAQ:AAPL) moving higher on earnings, the market was flat at the opening. The major indices traded on both sides of the flat line during the day, as traders awaited the FOMC announcement.

As expected, the FOMC did not raise rates and equities initially jumped higher, only to reverses and fall into the closing bell. Despite AAPL gaining 4.4% in the session, it was not enough to get the major indices into positive territory. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) ended with moderate losses, while the Nasdaq 100 (NDX) was down slightly.

At the close, the DJIA and SPX were down 0.7%, and the NDX gave up just 37.4 points. Breadth was slightly negative, on average volume. ROC(10)’s declined in the session, with all three major indices remaining in negative territory.

RSI’s moved lower, with the NDX the strongest index at 49.3. The DJIA fell to 41.9 and the SPX slipped to 44.7. The SPX MACD fell below signal joining the DJIA. The NDX continues with its MACD above signal. The ARMS index ended the day at 1.47, a bearish reading. Neither AAPL or the FOMC were able to save equities on Wednesday.

The major averages continue to be weak, and are consolidating in a fairly narrow range. The DJIA was down for its fourth straight session. The DJIA closed at 23924, holding above its 200D-SMA of 23739. It continues below its 20D-SMA of 24323. The SPX closed at 2635, continuing below its 20D-SMA of 2658. It traded as low as 2631 in the session, staying 17 points above its 200D-SMA of 2614. With its MACD falling below signal, we expect more near term weakness.

The NDX ended at 6644, holding just above its 20D-SMA of 6633. It remains below its 50D-SMA of 6739. The VIX added 3.1% to finish at 15.97. We get a heavy dose of economic reports today, but investors await Friday’s Employment report.

Near term support for the NDX is at 6633 and 6600. Near term resistance is at 6700 and 6739. Near term support for the SPX is at 2625 and 2614. Near term critical resistance is at 2658 and 2683.

Europe is lower in early trade Thursday, while U.S. Futures are slightly lower in the premarket. Major economic reports on tap today include Int. Trade, Jobless Claims, and Prod. and Costs all at 8:30am, PMI Services Index at 9:45am, Factory Orders and ISM Non-Mfg Index at 10:00am, and the EIA NatGas report at 10:30am.

The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) fell $0.24 (-0.10%) in premarket trading Thursday. Year-to-date, DIA has declined -3.34%, versus a -1.37% 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.

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