Equities opened to the downside on Wednesday, despite good economic numbers. We had better than expected Durables and New Home Sales, but they had little impact on the market. The major averages moved to the downside through most of the morning hours and did more damage to near term technicals. The major indices reversed in the PM and rallied to the upside going into the closing bell. The late day rally limited the losses for the day. All three major averages ended with moderate losses.
At the close, the Dow Jones Industrial Average (DJIA) was off 0.48%, the S&P 500 (SPX) fell 0.47%, and the Nasdaq 100 (NDX) gave up 0.41%. Breadth was decidedly negative, 3 to 1, on above average volume. ROC(10)’s declined in the session, with the NDX moving into negative territory. The DJIA and SPX remain in positive territory.
RSI’s also fell in the session, with only the DJIA remaining in overbought territory at 76.4. The SPX is now at 61.3 and the NDX finished at 53.1. The NDX and SPX remain with their MACD below signal, indicating the near term weakness. The DJIA remains the only major index to remain above signal. The ARMS index ended at 1.00, a perfect neutral position.
Yesterday’s moderate sell-off took a bit of the froth out of the market, but the afternoon rally kept the indices from a major sell-off. The DJIA closed at 23329, holding several hundred points above its 20D-SMA of 22901. Its upper Bollinger Band® is now at 23495.
The NDX had its ROC(10) go negative, revealing the continuing weakness in momentum. It also closed at 6055, one point below its 20D-SMA. The NDX is the weakest of the big three indices. Its 50D-SMA sits at 5972.
The SPX closed at 2557, just 8 points above its 20D-SMA, while the VIX added 0.63% to finish at 11.23.
Near term support for the NDX is at 6025 and 6000. Near term resistance is at 6075 and 6100. Near term support for the SPX is at 2550, 2549 and 2525. Near term resistance is at 2562 and 3575.
Europe is higher in early trade Thursday, and U.S. Futures are pointing higher in the premarket. We’ll see a slew of economic reports out today, including International Trade at 8:30am, Jobless Claims at 8:30am, Pending Home Sales at 10:00am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.68 (+0.29%) in premarket trading Thursday. Year-to-date, DIA has gained 19.82%, versus a 15.26% 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.