Market technician Dave Chojnacki of StreetOne Technical Analysis kicks off the new trading week with an update of the important technical levels to watch for the major U.S. averages.
The market opened lower on Friday, as Durable Goods came in slightly lower than expected. Most of the weakness was due to the transportation sector, suggesting that GDP may still be inline. Michigan Consumer Sentiment came in about where expected.
The major indices traded in a narrow range on Friday, before the long holiday weekend. Many traders may had left early, as volume was extremely low. Energy prices were moving lower, as the 10YR remained below the 3% mark, finishing at 2.93%. The major averages continued their slide into the final bell, with the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closing slightly lower, while the Nasdaq 100 (NDX) held on to a small gain.
At the close, the DJIA gave up 58 points, the SPX slipped 6.4 points, and the NDX fell just 11.2 points. Breadth was slightly negative, 1.1 to 1, on weak volume. ROC(10)’s were mixed, with the DJIA and SPX crossing into negative territory. The NDX crossed back into positive territory.
RSI’s were little changed, with the NDX continuing to lead at 60.6. The DJIA is now at 54.1 and the SPX at 56.1. All three major averages continue with their MACD above signal. The ARMS index ended the day at 1.52, a bearish reading.
The major indices continue to trade in a very narrow range for the last 12 sessions. For the week, the averages eked out a small gain, mostly on a strong session last Monday. For the week, the DJIA gained 0.1%, The SPX and the NDX added 0.3%.
The short term bias remains mixed as the NDX continues above its 50% retrace level of 6760. The DJIA and SPX continue below their 50% retrace level of 25074 and 2726, respectively. The narrow trading range is developing a “Bull handle”, which suggests we may be building for a break to the upside.
The DJIA closed at 24753, remaining above its 20D-SMA of 24565. The SPX ended at 2721, back below its 50% retrace level of 2726. The SPX remains above its 20D-SMA of 2698. The NDX closed at 6960, continuing above its 50% retrace level and with a positive near and short term bias. It remains comfortably above its 20D-SMA of 6850. The VIX was up 5.5% finishing at 13.22. Volatility remains low.
Near term support for the NDX is at 6900 and 6850. Near term resistance is at 6963 and 7000. Near term support for the SPX is at 2700 and 2698. Near term critical resistance is at 2726 and 2750.
Europe is significantly lower in early trade as the Italy crisis deepens, and U.S. Futures are significantly lower in the premarket. The only major economic report on tap today is Consumer Confidence at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $1.68 (-0.68%) in premarket trading Tuesday. Year-to-date, DIA has gained 0.83%, versus a 2.39% 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.