Equities opened the session weaker on Tuesday, with little news to move the Market. Monday’s session was kind of a ‘bounce’ from the previous losing sessions and acted like a stabilizer. Traders continued to question whether the S&P 500 (SPX)‘s test of its 200D average last week was the bottom.
Yesterday’s action, with its weak start and finish in positive territory, lent some credence to that theory. The major indices finished with small gains and volume dropped off considerably. Could we be making a base at this level? Possibly, but we would like to see more confirmation before any double fisted buying.
At the close, the Dow Jones Industrial Average (DJIA) added 39.1 points, the SPX gained 6.9 points, and the Nasdaq 100 (NDX) moved up 0.4%. Breadth was positive, 1.3 to 1, on below average volume. ROC(10)’s advanced in the session across the board, but remained in negative territory.
RSI’s moved higher, with all three major indices in the low to mid 40’s. All three major averages continue with their MACD below signal. The ARMS index ended the day at 1.12, a slightly bearish reading.
The major indices continued to attempt to consolidate and form at least a temporary bottom. All three major indices ended with small gains on Tuesday. Yesterday’s action saw the SPX test its 100D-SMA(2642) and then turnaround to the upside. The SPX closed at 2662, and traded as low as 2637. Its 50D-SMA(2720) remains as upside resistance.
The DJIA closed at 24640, and traded as low as 24421. It is looking at its 50D-SMA of 25118 as near term resistance. The NDX closed at 6553, comfortably above its 100D-SMA of 6380. Its 50D-SMA is now at 6595.
The VIX slipped 2.5% to finish at 24.97, as volatility could be on a sharp downward trajectory again.
Near term support for the NDX is at 6500 and 6475. Near term resistance is at 6575 and 6595. Near term support for the SPX is at 2650 and 2600. Near term resistance is at 2700 and 2720.
Europe is higher in early trade Wednesday, and U.S. futures are moderately higher in the premarket. Major economic reports on tap today include CPI at 8:30am, Retail Sales at 8:30am, Business Inventories at 10:00am, and the EIA Petroleum Report at 10:30am.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $1.38 (+0.56%) in premarket trading Wednesday. Year-to-date, DIA has declined -0.33%, versus a -0.32% 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.