Technical analyst Dave Chojnacki of Street One Financial examines Monday’s mixed market action, which saw money flow into safe haven areas as Treasury yields continued to stabilize.
The market opened the session moving to the upside on Monday, continuing last week’s rally. The move did not last long for the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX), as they quickly reversed and began moving lower. Pundits speculated that trade issues were putting pressure on targeted sectors, such as Industrials.
Industrials were indeed weak and pushed the DJIA lower. Meanwhile, we saw flows in to safe areas, such as Utilities. The Treasury will be doing some major funding this week and all eyes will be watching interest rates. The 10-Year Treasury Note ended down 2 basis points to 2.87% Monday.
The major averages ended mixed, with the DJIA and SPX slightly lower and the Nasdaq 100 (NDX) with a small gain. At the close, the DJIA fell 0.62%, the SPX inched down 3.5 points, and the NDX added 0.42%. Breadth was positive, 1.2 to 1, on below average volume. ROC(10)’s declined in the session, with the DJIA crossing back into negative territory. The NDX and SPX remained in positive territory.
RSI’s were mixed with the NDX moving higher to 66.3. The DJIA and SPX inched lower to 51.7 and 58.5, respectively. All three major indices remain with their MACD above signal. The ARMS index ended the day at 0.86, a slightly bullish reading.
In all, Monday was a rather lackluster session to start the week, but Techs continue their rally. Big Techs pushed the NDX to close at 7131, a new record high. It traded as high as 7156 during the session. The NDX remains the strongest index near term. It is comfortably above its 20D-SMA of 6837.
The DJIA ended lower at 25178, slipping below its 50D-SMA of 25304. It continues to hold its 20D-SMA of 24992. The SPX closed at 2783, holding above its 50D-SMA of 2743. It remains above the 61% Fibonacci level of 2760. The VIX added 7.8% to finish at 15.78, but still remains at very low levels.
Near term support for the NDX is at 7100 and 7050. Near term resistance is at 7150 and 7200. Near term support for the SPX is at 2775 and 2743. Near term resistance is at 2789 and 2800.
Europe is trading mixed early Monday, while U.S. Futures are pointing higher in the premarket. The only major piece of economic news coming out today is the Consumer Price Index-8:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.83 (+0.33%) in premarket trading Tuesday. Year-to-date, DIA has gained 1.85%, versus a 4.37% 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 #1 of 80 ETFs in the Large Cap Value ETFs category.