Technical analyst Dave Chojnacki of Street One Financial examines Tuesday’s big day for the Dow and updates the important technical levels to watch for the major U.S. indexes, which are getting quite a bit overextended here.
Good earnings in some old Dow stocks (Caterpillar (NYSE:CAT), 3M Company (NYSE:MMM)) got the Dow Jones Industrial Average (DJIA) off to a good start on Tuesday. The market was mixed and choppy in the early trade, but eventually a steady move to the upside took hold.
The DJIA was strong thanks to the big Dow stocks, and helped propel equities across the board. The Nasdaq 100 (NDX) and S&P 500 (SPX) ended with small gains, despite a late day sell-off. The major indices saw the volume pick-up, though not all gains were as strong as the DJIA, which made new highs in the session. Volume was also strong for the second session this week.
At the close, the DJIA was up 0.72%, the SPX added just 4.1 points, and the NDX gained 0.2%. Breadth was slightly positive, 1.2 to 1, on average volume. ROC(10)’s were mixed in the session, with the DJIA and NDX advancing , while the SPX declined. All three major indices remain in positive territory.
RSI’s inched higher, with the DJIA at 85.6, the strongest. The NDX ended at 58.1 and the SPX at 71.2. The SPX MACD crossed below signal, joining the NDX. The DJIA remains the only major index to remain above signal. The SPX MACD falling below signal may be a result of the extended sideways action in the last two weeks. It is a near term bearish signal that needs to be watched.
The ARMS index ended at 0.87, a slightly bullish reading.
As noted, the DJIA closed at 23441, a new high. Intraday, it traded as high as 23485, also a new high. It remains above its 20D-SMA of 22851.
The NDX closed at 6080, holding slightly above its 20D-SMA of 6050. The SPX inched out a small gain to finish at 2569. The SPX remains slightly above its 20D-SMA of 2547.
IWM (Russell Small Caps) closed at 149.18, and remains just below its 20D-SMA of 149.34. The VIX added 0.8% to finish at 11.07.
Near term support for the NDX is at 6075 and 6050. Near term resistance is at 6100 and 6122. Near term support for the SPX is at 2550 and 2547. Near term resistance is at 2575 and 2588.
Europe is mixed in early trade Wednesday, and U.S. Futures are also mixed in the premarket. Along with several key earnings reports out today, major economic reports on tap include Durable Goods Orders at 8:30am, FHFA House Prices at 9:00am, New Home Sales at 10:00am, and the EIA Petro Report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) fell $0.24 (-0.1%) in premarket trading Wednesday. Year-to-date, DIA has gained 20.40%, versus a 15.84% 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.