Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a review of the recent up-and-down market action, along with an update of the important technical levels to watch for the major U.S. averages.
Trade fears had the market opening significantly lower on Friday. The Employment report was mixed, with new hires lower than expected, but a decent increase in wages. Equities continued to slide through the session, and the selling accelerated on comments from the Fed Chair.
A last hour rally kept the major indices from closing at their lows. All three major averages ended the day with significant losses. At the close on Friday, the Dow Jones Industrial Average (DJIA) was down 2.3%, the S&P 500 (SPX) fell 2.1%, and the Nasdaq 100 (NDX) gave up 2.4%. Breadth was decidedly negative, 3.8 to 1, on average volume.
RSI’s moved lower with the DJIA leading at 43.6. The SPX ended at 41.8 and the NDX at 40.2. The ARMS index ended at 2.9, a very bearish reading. For the week, the DJIA slipped 0.7%, the SPX fell 1.3%, and the NDX was down 2.2%. The VIX spiked 13.4% on Friday to 21.49. For the week, the VIX was up 7.6%. This week will be fairly light for economic reports, but we do get CPI and PPI numbers and Consumer Sentiment.
Long term, technicals were challenged again last week as the SPX and DJIA traded near their 200D-SMA. The DJIA and SPX have spent the last 10 sessions trading near their 200D-SMA’s of 23478 and 2593, respectively. The SPX and NDX are trading below their 1-year trend-lines of 2612 and 6500, respectively. The DJIA is above its 1-year trend-line of 23800.
Short term, the bias remains to the downside. All three major indices are well below their 50D-SMA’s: DJIA-24858, SPX-2709, NDX-6767. Near term technicals remain weak, however, the RSI’s for all 3 major indices have been rising since 3/23. We also saw the DJIA MACD cross above signal. The indices have spent the last 10 trading sessions looking like they want to build a base.
European markets are mixed in early trade Monday, while U.S. Futures are higher in the premarket. There are no major economic reports on tap today.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $2.12 (+0.89%) in premarket trading Monday. Year-to-date, DIA has declined -3.33%, versus a -2.68% 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 80 ETFs in the Large Cap Value ETFs category.