Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of Friday’s pullback and and updated of the important technical levels to watch as we head into earnings season.
After some early choppiness on Friday, the major indices traded to new intraday record highs. The afternoon brought in a bit of selling, which left the major averages pulling back into the close.
The Nasdaq 100 (NDX) was the only index to hold the gains to close with a new high. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed just below their record highs.
While the major indices all made new highs last week, small caps actually consolidated during the week. At the close of the weekly period, the DJIA gained 30.7 points, the SPX inched up 2.2 points, and the NDX added 0.37%. Breadth was positive, 1.4 to 1, on below average volume. ROC(10’s) were mixed, with the DJIA advancing and the SPX and NDX declining. All 3 remain in positive territory.
RSI’s moved higher with the DJIA and SPX in overbought territory, at 78.6 and 72.3, respectively. The ARMS Index ended at 1.14, a slightly bearish reading. For the week: the DJIA was up 0.4%, the SPX added 4 points, and the NDX gained 0.4%. The VIX fell just 0.04 of a point for the week to 9.61. We get Beige Book and more Housing Data this week.
Long term, the upside bias for stocks continues. All three major indices made new highs again last week. The key averages continue well above their 50WK moving averages: DJIA-20844, SPX-2369, NDX-5474.
Short term, the upside bias also continues. Since early November of 2016, the major averages have moved steadily to the upside, with only minor pullbacks. The DJIA isup 27.8%, SPX up 22.4%, and NDX up 30.7%, since November 2016.
Near term, the upside bias remains positive, as the major averages move to new highs. Small-caps consolidated last week, however.
The DJIA and SPX are slightly overbought near term. Near term critical support is now at: DJIA-22219, SPX-2488, NDX-5839. We may see a little consolidation at these levels.
Europe is mixed in early trade Monday, while U.S. Futures are slightly higher. On the economic data front today, we’ll see the Empire State Mfg. Survey at 8:30am and the Treasury Budget at 2:00pm.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.15 (+0.07%) in premarket trading Monday. Year-to-date, DIA has gained 17.54%, versus a 15.11% 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 #4 of 75 ETFs in the Large Cap Value ETFs category.