Market Technician Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of last weeks action and an update to the important technical factors affecting the U.S. equities markets right now.
Prices opened higher on Monday, but then gradually deteriorated through the morning hours. Equities found support just after the noon hour and began a slow rise into the close.
Volume was again missing, and it didn’t take much to move the market in either direction. By the final bell, the major indices ended mixed and little changed. Hurricane Harvey (now Tropical Storm Harvey) closed many refineries in the Houston area and this hit some of the energy stocks, which led to the Dow Jones Industrial Average (DJIA) ending in the red.
At the close, the DJIA was down 5.2 points, the S&P 500 (SPX) inched up 1.1 points, and the Nasdaq 100 (NDX) added 15.5 points. Breadth was slightly negative, 1.1 to 1, on light volume. ROC(10)’s declined with the SPX moving back into negative territory, joining the DJIA and NDX.
RSI’s were little changed, ranging from 46.8 to 50.3, with the DJIA still the leader. MACD’s remain below signal for all three major indices. The ARMS index ended the day at 1.39, a bearish reading.
It was another typical slow Monday for equities, as we march through the last unofficial week of summer. The major averages once again traded within moving average ranges. The DJIA traded within its 20D-SMA at 21915 and its 50D-SMA at 21679. The NDX found support just near its 50D-SMA of 5820, but could not get back above its 20D-SMA of 5866. The SPX closed at 2444, below its 20 and 50D-SMA’s of, 2455 and 2450, respectively.
We look for the SPX to get back above its trend-line(2456), to resume its upside trend. 2405 remains critical support.
The iShares Russell 2000 (NYSE:IWM) (Russell 2000) was able to get back above its 200D, despite the fact that breadth was slightly negative. GLD (NYSE:GLD) (SPDR Gold) broke out of a short term range closing at 124.69, with 125.00 as resistance. The VIX was little changed, up 0.04 of a point to 11.32.
Near term support for the NDX is at 5820 and 5800. Near term resistance is at 5850 and 5866. Near term support for the SPX is at 2437 and 2425. Near term resistance is at 2450 and 2455.
Europe is significantly lower in early trade Tuesday, and U.S. Futures are pointing lower in the premarket. In terms of economic data on tap today, we’ll see the Redbook at 8:55am and Consumer Confidence numbers at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $1.17 (-0.54%) in premarket trading Tuesday. Year-to-date, DIA has gained 11.60%, versus a 10.42% 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 76 ETFs in the Large Cap Value ETFs category.