After a major loss on Thursday, equities opened to the upside on Friday. It didn’t take long for the volatility to show up, however, as the major averages tumbled deep into the red. Rising interest rates continue to keep pressure on equities, as the 10-year remains near 2.85%.
The major indices tested some key technical levels before bouncing near the close and finishing to the upside. Volatility remains extremely high, with the VIX near 30.
At the close, the Dow Jones Industrial Average (DJIA) was up 1.3%, the S&P 500 (SPX) added 1.5%, and the Nasdaq 100 (NDX) gained 1.7%. Breadth was positive, 1.5 to 1, on heavy volume.
RSI’s rose in the session, with the major indices in the mid to upper 30’s. MACD’s are below signal for all three major indices. ROC(10)’s advanced in the session, but remain in negative territory.
For the week, the DJIA was down 5.2%, and the NDX and the SPX lost 5.1%. The VIX fell 13% on Friday to 29.06. For the week it was up 67% however.
Earnings reports continue this week, and we also get a look at CPI and Retail sales. Eyes will continue to watch interest rates as perhaps the best indicator for equities moving forward.
Long term, the upside bias is being challenged. The major averages are testing key long term technical indicators. The SPX tested its 200D-SMA (2539) on Friday, trading as low as 2532. It did close comfortably above that level, however.
The DJIA and NDX traded near their 150D-SMA’s of 23344 and 6210, respectively. We need to watch these 1-year trendlines: DJIA-23350, SPX-2575, NDX-6300.
Short term, the bias has reversed to the downside. All three major indices are below their 50D-SMA’s. They are also below their 50% retracement levels of: DJIA-24206, SPX-2665, NDX-6477. Near term, bias remains to the downside. Near term technicals are broken and the major indices remain with their MACD below signal.
Europe is higher in early trade Monday, and U.S. futures are pointing significantly higher in the premarket. There are no major economic reports on tap today.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $3.45 (+1.43%) in premarket trading Monday. Year-to-date, DIA has declined -2.16%, versus a -2.01% 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.