Technical analyst Dave Chojnacki of Street One Financial updates the important technical levels to watch in the major U.S. averages, as tech stocks continue to take the lead from industrials.
Good economic numbers helped equities move to the upside at the open on Tuesday, but they quickly reversed to the downside. Strong Consumer Confidence numbers pushed the major indices back to the upside through the morning hours, however.
Equities then traded sideways until late in the day, when a quick sell-off left the averages holding on to small gains. The Nasdaq 100 (NDX) had enough of a gain to hit new highs for the third straight session. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) ended with small gains.
At the close, the DJIA gained 28.5 points, the SPX inched up 2.4 points, and the NDX added 0.34%. Breadth was positive, 1.5 to 1, on above average volume. ROC(10)’s declined in the session, but all three remain in positive territory.
RSI’s inched higher, with the DJIA the strongest, ending at 72.9. The NDX moved into overbought territory at 72.1 and the SPX finished at 65.7. The DJIA and NDX remain with their MACD above signal. The SPX MACD continues below signal. The ARMS index ended at 1.33, a bearish reading.
Techs continue to have taken over from the Industrials, as we see healthy sector rotation. This lead the NDX to make three straight new highs and begin to move into overbought territory.
All three major averages developed ‘Doji’s’ in the session, indicating indecision.
The NDX closed at 6248 and traded as high as 6258. It finished just above its upper Bollinger Band® of 6222. The NDX 20D-SMA is now at 6098.
The DJIA closed at 23377 and remains comfortably above its 20D-SMA of 23079. The SPX closed at 2575, and traded as high as 2578. Its 20D-SMA sits at 2559. The VIX fell 3% to finish at 10.18.
Near term support for the NDX is at 6225 and 6200. Near term resistance is at 6250, 6258 and 6275. Near term support for the SPX is at 2575, 2559 and 2550. Near term resistance is at 2580-82 and 2588.
We get the FOMC decision at 2:00PM today; no rate increase is expected. Earnings also continue this week.
Europe is higher in early trade Wednesday, while U.S. Futures are pointing significantly higher in the premarket. Major economic reports on tap today include the ADP Employment Report at 8:15am, PMI/ISM Manufacturing Index at 9:45am, Construction Spending at 10:00am, and the aforementioned FOMC Announcement at 2:00pm.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $1.23 (+0.53%) in premarket trading Wednesday. Year-to-date, DIA has gained 20.06%, versus a 16.10% 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.