A lower than expected ISM Services number Tuesday morning did little to help the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX), which began selling off right at the open.. Those indices were slightly extended, so a controlled pullback was not unexpected.
Big Techs finally found some support and investors were buying the dip. Most of the buying was in the large cap issues, as the Nasdaq 100 (NDX) only had a small gain by the close. The selling was broad in other equities, and this left the DJIA and SPX with small losses at the final bell.
At the close, the DJIA was down 0.45%, the SPX fell 0.37%, and the NDX added 1.4 points. Breadth was decidedly negative, 1.9 to 1, on average volume. ROC(10)’s were mixed, with the DJIA and SPX declining, but remaining in positive territory. The NDX advanced, but remained in negative territory.
RSI’s were also mixed, with the DJIA and SPX falling, but remaining at high levels. The NDX finished at 47.4, little changed. The DJIA and SPX remain with their MACD above signal, while the NDX remains below. The ARMS index ended at 1.51, a fairly bearish reading.
The DJIA and SPX recorded small losses as they pulled back from overbought levels. They both pulled back below their upper Bollinger Bands® of 24313 and 2649, respectively. The DJIA closed at 24180, holding above its 20D-SMA of 23669. The NDX ended with a small gain at 6265. It was the ’FANG’ stocks seeing most of the buying. The NDX remains below its 20D-SMA of 6333. It holds above its 50D-SMA of 6188. The upper Bollinger Band for the NDX sits at 6427.
The SPX fell to 2629, holding above its 20D-SMA of 2601. It traded as high as 2648 in the session, a point below its upper Bollinger Band of 2649. The VIX fell 3% to finish the day at 11.33.
Near term support for the NDX is at 6250 and 6227. Near term resistance is at 6300 and 6333. Near term support for the SPX is at 2625 and 2612. Near term resistance is at 2649, 2650 and 2665.
Europe is mixed in early trade Wednesday, while U.S. Futures are pointing lower in the premarket. Major economic reports on tap today include International Trade at 8:30am, PMI Services Index at 9:45am, and ISM Non-Mfg Index at 10:00am.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.37 (+0.15%) in premarket trading Wednesday. Year-to-date, DIA has gained 24.36%, versus a 18.83% 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.