Market technician Dave Chojnacki of Street One Financial recaps Monday’s mixed market action and looks ahead to the rest of the week, noting that two the major U.S. averages remain below a key technical level.
Equities opened slightly higher on Monday and then traded in a choppy manner. The major indices traded on both sides of the flat line during the session. Existing Home Sales came in better than estimates. Equities were hesitant waiting for some key earnings reports this week: Alphabet (NASDAQ:GOOGL) Inc C (NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Proofpoint Inc (NASDAQ:PFPT), Twitter Inc (NYSE:TWTR).
The 10-Year Treasury Note closed at 2.97%, pushing against that all important 3% handle. A last hour rally, pulled the major averages off their lows and they finished mixed and little changed. At the close, the Dow Jones Industrial Average (DJIA) gave up 14.2 points, the S&P 500 (SPX) inched up 0.15 of a point, and the Nasdaq 100 (NDX) slipped 18.9 points. Breadth was negative, 1.19 to 1, on below average volume. ROC(10)’s declined in the session, but remained in positive territory.
RSI’s were barely changed, with the DJIA and SPX ending at 49.6. The NDX finished at 48.2. All three major indices continue with their MACD above signal. The ARMS index ended the day at 0.75, a slightly bullish reading. The major averages changed very little at the end of the session, but the trade was choppy. The indices remained below their 50D-SMA’s, a key technical level.
The DJIA closed at 24448, below its 50D-SMA of 24612. Its 20D-SMA is 24274. The DJIA remains below its 50% retrace level of 25074. The SPX ended the day at 2670, closing below its 50D-SMA of 2688. It also continues below its 50% retrace level of 2726, which is key to confirm a reversal in downside bias. The SPX remains above its 20D-SMA of 2649. The NDX closed at 6648, closing below its 50D-SMA(6744). The NDX continues to hold its 20D-SMA of 6606. It is below its 50% retrace level of 6760. The VIX finished at 16.34, down 3.2%.
Near term support for the NDX is at 6606 and 6550. Near term resistance is at 6700 and 6744. Near term support for the SPX is at 2649 and 2645. Near term critical resistance is at 2688 and 2700.
Europe is mixed in early trade Tuesday, while U.S. Futures are pointing moderately higher in the premarket. Major economic reports on tap today include the FHFA House Price Index at 9:00am, New Home Sales at 10:00am, and Consumer Confidence at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $1.45 (+0.59%) in premarket trading Tuesday. Year-to-date, DIA has declined -1.22%, versus a -0.11% 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.