Market technician Dave Chojnacki of Street One Financial examines the state of the U.S. equities markets from a technical perspective, striking a cautious tone amid a lack of conviction in the recent bounce-back.
Housing Numbers were a little weaker than forecast On Wednesday, but the market shrugged this off and opened higher. Equities traded in a narrow range until just after noon hour, when they began to trend lower. Investors then greeted the FOMC Minutes with another push to the downside, as hints of unwinding their Balance sheet starting in September put a little fear in equities.
By the close, the major indices held on to small gains, but it didn’t feel like equities were turning the corner on the recent sell-off. At the close, the Dow Jones Industrial Average (DJIA) added 25.8 points, the S&P 500 (SPX) was up just 3.5 points, and the Nasdaq 100 (NDX) inched up 9.6 points.
Breadth was positive, 1.5 to 1, on below average volume. ROC(10)’s were mixed, with the DJIA and NDX rising, while the SPX declined. The SPX is the only index in negative territory. RSI’s were slightly higher, with the DJIA continuing to lead at 63.4. The NDX and SPX remain in the low to mid 50’s.
MACD’s remain below signal for all three major indices. The ARMS index ended the day at 1.07, a nearly neutral reading.
Little movement in the major indices on Wednesday, as equities traded in a narrow range. All three major indices developed a ‘Doji’ in the session, which indicates indecision and possible reversal. The SPX continues to have a hard time holding its 20D-SMA (2469), failing to close above that level. It traded as high as 2474, but closed at 2468. Critical near term support is at 2405.
The NDX closed at 5917, holding above its 20D-SMA of 5905. The DJIA was able to get back above the 22000 level and close at 22024. Near term, we remain cautious as we do not see strong conviction.
The VIX slipped 2.4% to 11.74, as volatility remains low.
Near term support for the NDX is at 5905, 5900, and 5875. Near term resistance is at 5925 and 5944. Near term support for the SPX is at 2450 and 2425. Near term resistance is at and 2469 and 2480.
Europe is slightly lower in early trade, while U.S. Futures are pointing lower in the premarket. Today on the economic report front, we’ll see Jobless Claims and the Philly FED at 8:30am, Industrial Production numbers at 9:15am, Leading Indicators at 10:00am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF fell $0.5 (-0.23%) in premarket trading Thursday. Year-to-date, DIA has gained 12.90%, versus a 11.49% 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 #4 of 76 ETFs in the Large Cap Value ETFs category.