Market technician Dave Chojnacki of Street One Financial recaps Tuesday’s mixed market action and updates the important technicals to focus on as we progress through what promises to be a choppy month of May.
The major indices opened mixed on Tuesday. A combination of economic and earnings reports put a damper on the Dow Jones Industrial Average (DJIA). ISM and Construction spending came in lower than expected, and Pfizeer disappointed in their earnings report. These events sent the DJIA down over 354 points at one time, before reversing and finishing with a small loss.
Meanwhile the Nasdaq 100 (NDX) was holding up much better powered by a good day in Techs and AAPL. The NDX ended the day with a significant gain, while the S&P 500 (SPX) eked out a small gain.
At the close, the DJIA was off 0.27%, the SPX added 0.25%, and the NDX moved up 1.1%. Breadth was slightly positive, 1.1 to 1, on slightly below average volume. ROC(10)’s declined in the session, with all three major indices remaining in negative territory.
RSI’s were mixed with the NDX moving higher and becoming the strongest at 51.2. The DJIA dropped to 44.8 and the SPX was little changed at 47.9. The DJIA continued with its MACD bel0ow signal, while the NDX and SPX remain above. The ARMS index ended the day at 1.37, a slightly bearish reading.
It was the third straight down day for the DJIA, with PFE (NYSE:PFE) down 3.3% contributing to its poor performance. The DJIA closed at 24099, holding below its 20D-SMA of 24340. It came within 80 points of its 200D-SMAv(23727). Until it moves above its 50% retrace level of 25074, short term bias remains to the downside.
The SPX ended at 2654, near its high of the day. It remained just below its 20D-SMA of 2659. The SPX must move through its 50% retrace at 2726 to reverse bias. Its 50D-SMA is at 2684. The NDX closed at 6681, moving above its 20D-SMA of 6628. It remains below its 50D-SMA of 6742. The NDX 50% retrace stands at 6760. The VIX slipped 2.7% to end at 15.49.
Near term support for the NDX is at 6628 6600. Near term resistance is at 6700 and 6742. Near term support for the SPX is at 2625 and 2613. Near term critical resistance is at 2659 and 2684.
Europe is slightly higher in early trade Tuesday, while U.S. Futures are slightly higher in the premarket. Major economic reports on tap today include the ADP Employment report at 8:15am, EIA Petro Report at 10:30am, and the FOMC Announcement at 2:00pm.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF (DIA) rose $0.49 (+0.20%) in premarket trading Wednesday. Year-to-date, DIA has declined -2.68%, versus a -0.70% 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 #3 of 81 ETFs in the Large Cap Value ETFs category.