Technical analyst Dave Chojnacki of Street One Financial examines the market’s reaction to the Federal Reserve interest-rate hike decision and updates the important technical levels for the major U.S. indexes, as the Dow Jones Industrial Average touches new all-time highs.
Equities were slightly higher at the open on Wednesday, despite disappointing numbers on Retail Sales. The indices moved in a narrow range and were generally mixed as investors waited for the FOMC statement.
As expected, the FOMC raised rates by a quarter of a point. Equities sold off on this news, but then bounced off their lows in the last hour. The Dow Jones Industrial Average continued its recent strength and ended with a small gain, but at a new high. The Nasdaq 100 was down moderately, while the S&P 500 closed off just a few points.
At the close, the DJIA was up 0.22%, the SPX slipped just 2.4 points, and the NDX fell 0.43%. Breadth was slightly negative, 1.1 to 1, on slightly above average volume. ROC(10)’s were mixed, with the DJIA moving higher and the SPX and NDX declining. The DJIA and SPX remain in positive territory, and the NDX continues in negative territory.
The DJIA RSI moved higher and ended at 68.8. It is now the strongest index near term. The RSI’s of the NDX and SPX fell, with the NDX the lowest at 49.3. The NDX continues with its MACD below signal, while the DJIA and SPX remain above. The ARMS index ended the day at 1.56, a fairly bearish reading.
The DJIA continued its recent strength, registering a new closing high 21374 and an intraday high 21391. Its top Bollinger Band® now sits at 21467. It is also comfortably above its 20D-SMA of 21067.
The NDX resumed its prior losing ways, with Tech stocks leading the way down. It remains below its 20D-SMA of 5763. The 50D-SMA offers support at 5676.
The SPX was little changed and remains above its 20D-SMA of 2414. Its near term technical strength continues.
IWM fell 0.59% to 141.26, as small caps started to weaken again. The VIX rose 2.1% to end at 10.64.
Near-term support for the NDX is at 5725 and 5700. Near term resistance is at 5750 and 5775. Near term support for the SPX is at 2425 and 2414. Near term resistance is at 2443 and 2450.
Europe is significantly lower in early trade, and U.S. Futures are also pointing much lower in the pre-market. We have a slew of economic data on tap today, including Jobless Claims, Philly FED, Empire State survey and Import and Export, all at 8:30am, Industrial Production at 9:15 am, Housing Market Index at 10:00 am, and Natural Gas Inventories at 10:30 am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.84 (-0.39%) in premarket trading Thursday. Year-to-date, DIA has gained 8.27%, versus a 9.26% 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 #5 of 75 ETFs in the Large Cap Value ETFs category.