The market opened lower on Friday, with little news to move the averages. Leading Indicators were slightly better than expected, and pulled the indices off their lows.
Prices moved higher through the PM hours and ended at their highs of the day. The NDX was the big winner on strength in the Biotech sector. All three major indices closed to the upside, establishing new record closing highs.
Despite being an options expiration day, volume was weak. At the close, the DJIA added 4.2 points, the SPX inched up 3.9 points, and the NDX moving up 0.45%. Breadth was slightly negative, 1.1 to 1, on below average volume. ROC(10’s) were mixed and continued in positive territory.
The ARMS Index ended at 0.91, slightly bullish at the close. For the week, the DJIA was up 1.7%, the SPX gained 1.5%, and the NDX added 1.8%. The VIX was down 2.3% on Friday, to finish at 11.37. It was up 4.7% for the week. Volatility remains extremely low.
Long term, the upside bias continues as the major averages move to new record highs again last week. Volume continues to be low and the major indices are at overbought levels.
We also see the major averages bumping up against the top of their Bollinger Bands, suggesting they may be somewhat over-extended. Bollinger Bands top: DJIA-20670, NDX-5328, SPX-2354. Short term, the bias continues to the upside, with the 50% retracement at: NDX-4914, SPX- 2192.
Near term, we see the indices over-extended and we would expect consolidation or a pullback. Critical near term support for the SPX is 2233 and 5086 for the NDX. Near term targets are NDX-5362, SPX- 2382.
Europe is moderately higher in early trade, and U.S. Futures pointing higher. We get Housing data and FOMC minutes later this week, but without any major economic reports due out today, earnings from major firms like Walmart and Home Depot will take center stage.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.62 (+0.3%) in premarket trading Tuesday. Year-to-date, DIA has gained 4.24%, versus a 5.17% rise in the benchmark S&P 500 index during the same period.
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Dave Chojnacki is the Chief Market Technician at Street One Financial. He provides technical support for the Street One team and also develops individual analysis for Clients as requested.
Dave is a major contributor to the ‘ETF Daily’, a morning newsletter providing clients a daily look at market technicals of the major indices and selected ETF’s. Market trends, support and resistance levels are provided in the daily letter. The Technical portion of the daily can also be found on Seeking Alpha. Mr. Chojnacki has been quoted in a number of industry publications including the Reuters, ETF Trends, Minyanville, Yahoo Financial and Investors.Com.
In addition, Dave assists with desk trading when necessary. He possesses a Series 7 and 63.
Prior to joining Street One, Dave designed and developed I/T Systems for the Insurance and Financial Industries.