Equities were flat again on Friday as economic reports and Earnings had little effect on prices. It’s obvious that Tax Reform is the key item on investors minds right now. Until mixed messages from Washington are resolved we may see equities languish in a narrow range.
On Friday, all three major indices ended with small losses for the second day in a row. At the close, the Dow Jones Industrial Average (DJIA) gave up 39.7 points, the S&P 500 (SPX) inched down 2.3 points, and the Nasdaq 100 (NDX) slipped 3.1 points.
Breadth was negative, 1.4 to 1, on average volume. RSI’s fell, pulling the major averages below 70, and removing some of the overbought condition. The ARMS Index ended at 0.87, a slightly bullish reading.
It was a week of 2 different markets, where the major averages made new highs for the first three days and then pulled back at the end of the week. For the week, the DJIA fell 0.4%, the SPX slipped just 5 points, and the NDX gained 0.2%. The VIX moved up 23.5% for the week ending at 11.29. It’s a light week for economic reports coming up.
Long term, the upside bias continues to be strong. All three major indices made new highs last week. We saw a bit of a sell-off at the end of the week, but this is healthy for an uptrending market. This week, we look at how much the major indices are above their 200D-SMA’s: DJIA-8.8%, SPX-6.1%, NDX-10.2%.
Short term, the upside bias also continues. The major averages are comfortably above 6 month closing lows of: DJIA-20606, NDX-5580, SPX-2356. Near term, the last two days of the week removed some of the overbought levels. MACD’s continue below signal for the DJIA and SPX, so there may be additional weakness in store. We watch the 50D-SMA for critical near term support: DJIA-22766, SPX-2536, NDX-6068.
Europe is lower in early trade Monday, while U.S. Futures are pointing lower in the premarket. There are no major economic reports on tap for today, although earnings will continue in earnest this week.
The SPDR Dow Jones Industrial Average ETF (DIA) fell $0.44 (-0.19%) in premarket trading Monday. Year-to-date, DIA has gained 20.47%, versus a 16.53% 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.