Technical analyst Dave Chojnacki of Street One Financial wraps up the trading week with a closer look at yesterday’s massive equities rally and updates the key technical levels to focus on as we head into the holiday-shortened period next week.
While Job Claims were disappointing on Thursday morning, investors were focused on the House passing the Tax Plan. With additional economic numbers meeting expectations and positive thoughts on the tax cut, equities reversed their two-day slump.
All three major indices moved higher in the session, as volume also improved. Big Techs were leading the way, helping the Nasdaq 100 to strong gains. The tax plan passed the House, and the averages coasted into the close, just off their highs of the day.
At the close, the Dow Jones Industrial Average added 0.8%, the S&P 500 moved up 0.82%, and the Nasdaq 100 spiked 1.3%. Breadth was decidedly positive, 3 to 1, on above average volume. ROC(10)’s advanced in the session, with the DJIA the only average in negative territory. The SPX crossed back positive, to join the NDX. RSI’s moved higher, with the NDX continuing to lead at 67.3. The DJIA ended at 61.7 and the SPX at 59.3. MACD’s remain below signal for all three major indices.
The ARMS index ended the day at 1.17, indicating the weakness late in the session. It was a nice bounce after the two day pullback, but will it last? Negative MACD’s remain a near term concern.
The DJIA and SPX did move back above their 20D-SMA’s of 23427 and 2578, respectively. The DJIA closed at 23458, holding above its lower Bollinger Band® of 23254.
The NDX had a big day closing at 6339. It traded at a new intraday high of 6352 and remains comfortably above its 20D-SMA of 6231. The SPX closed at 2585, just 9 points below its all-time high of 2594. Its upper Bollinger® Band sits at 2598. Critical near term support remains at its 50D-SMA of 2545.
The VIX fell dramatically to 11.76, a 10.4% drop.
Near term support for the NDX is at 6325 and 6300. Near term resistance is at 6345, 6352 and 6375. Near term support for the SPX is at 2578 and 2562. Near term resistance is at 2594, 2597 and 2600.
Europe is higher in early trade Friday, while U.S. Futures are mixed in the premarket. The only major piece of economic news out today will be Housing Starts at 8:30am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.03 (-0.01%) in premarket trading Friday. Year-to-date, DIA has gained 20.71%, versus a 16.77% 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 80 ETFs in the Large Cap Value ETFs category.