Poor earnings from some of the big banks and weak Retail Sales numbers could not put a damper on equities moving to new highs. These events just helped to bolster the case for leaving interest rates low, which is positive for equities.
By the end of the session on Friday, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) made new highs, while the Nasdaq 100 (NDX) was up for the 6th straight day. At the close, the DJIA gained 0.39%, the SPX added 0.47%, and the NDX was up 0.77%.
Breadth was positive, 2.3 to 1, on below average volume. ROC(10’s) advanced across the board. RSI’s moved higher with the DJIA continuing to lead at 65.3, but all three major indices are now in the 60’s. The ARMS Index finished at 1.01, a neutral reading.
For the week, the major indices did fairly well: the DJIA and SPX added 1% and the NDX was up 3.2%. The NDX has nearly recovered most of the 5.1% pullback it suffered from early June.
The VIX finished at 9.51%, off 3.9%. We’ll see little in the way of economic reports this week, but earnings reports begin to pick up in earnest, so there will be plenty of news to push equities around.
Long term, the upside bias continues, with the DJIA and SPX making new highs last week. The NDX closed just 47 points below its all-time high of 5885. With the Dow Transports confirming the new highs, we would expect to see the rally continue.
The major averages are well above their 200D-SMA’s, but still may have some room to run.
Short term, the bias also remains to the upside. The averages are comfortably above 50% retracement levels. Near term, the caution has been removed. The NDX made a big turnaround and near term technicals have reversed for all three major indices. MACD’s have now turned positive for the big 3 as well.
Critical near term support remains at: DJIA – 20553, SPX – 2352, NDX – 5568.
Europe is mixed in early trade Monday, and US Futures are slightly higher in the premarket. As noted previously, economic news will be very light this week, with nothing of note on tap for today.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.09 (+0.04%) in premarket trading Monday. Year-to-date, DIA has gained 9.49%, versus a 9.86% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, David Chojnacki, does not endorse or recommend any issuer or security mentioned herein.
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.