Market technician Dave Chojnacki of Street One Financial recaps last week’s back-and-forth market action and looks ahead to the new week, which promises to bring plenty of fireworks to what’s already been quite a volatile year for equities.
The major indices opened higher on Thursday and never looked back. Techs were finally having a good day and helping to push the Nasdaq 100 (NDX) to significant gains. The FANG stocks were strong on the day as they look to build a bottom.
The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) also closed with significant gains despite a last hour sell-off, before the long holiday weekend. The trading last week was choppy, but typical of indices looking to make a base. At the close on Friday, the DJIA was up 1%, the SPX closed up 1.3%, and the NDX added 1.86%. Breadth was decidedly positive, 3.4 to 1, on average volume.
RSI’s moved higher with the DJIA leading at 43.1. The SPX ended at 42.7 and the NDX at 42.2. The ARMS index ended at 0.85, a bullish reading. For the week, the DJIA added 2.4%, the SPX gained 2%, and the NDX was up 1.1%. The VIX fell 12.6% on Friday to 19.97. For the week, the VIX was down 20%. This week, we get key manufacturing data and the Employment report at the end of the week.
Long term, technicals were challenged again last week as the SPX and DJIA traded near their 200D-SMA. The DJIA 200D is at 23412 and the SPX is at 2589. Both indices also traded below their 1 year trend-lines of DJIA (23800) and SPX (2612). The DJIA and SPX are both now lower for the year.
The NDX has held up long term, as its 200D-SMA is well below current levels at 6267.
Short term, the bias remains to the downside. The major indices tested 10% correction levels last week. All three major indices are well below their 50D-SMA’s: DJIA-25066, SPX-2729, NDX-6807. Near term technicals remain weak, although the major indices tried to form a bottom last week. All 3 major averages have their MACD’s below signal and are below their 20D-SMA’s.
European markets are closed today, while U.S. Futures are pointing lower in the premarket. Major economic reports on tap today include PMI Manufacturing Index at 9:45am, ISM Manufacturing Index at 10:00am, and Construction Spending at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) fell $1.08 (-0.45%) in premarket trading Monday. Year-to-date, DIA has declined -2.42%, versus a -1.39% 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 80 ETFs in the Large Cap Value ETFs category.