Market technician Dave Chojnacki of Street One Financial looks deeper at Wednesday’s moderate bounce for U.S. equities and notes that a follow-through rally on Thursday appears unlikely from a technical perspective.
After the prior session’s major selloff, investors found some comfort in North Korea calming a bit and economic numbers hitting their estimates. There was also news from the White House of a deal to lift the debt ceiling and fund the Harvey recovery.
Equities responded by trading in positive territory, though in a narrow range. Volume was good again, as many investors were re-allocating their portfolios at the beginning of the month. By the end of the session, the major indices closed with moderate gains.
At the close, the Dow Jones Industrial Average (DJIA) added 0.25%, the S&P 500 (SPX) was up 0.31%, and the Nasdaq 100 (NDX) gained 0.31%. Breadth was positive, 1.6 to 1, on above average volume. ROC(10)’s declined, with the DJIA moving back into negative territory. The NDX and SPX remain in positive territory.
RSI’s inched up, with the NDX the strongest at 57.7. The DJIA ended at 48.9 and the SPX at 54.2. The NDX and SPX remain with their MACD above signal. The DJIA continues below. The ARMS index ended the day at 0.77, a bullish indication.
We received some solace from yesterday’s session, as the selling from the prior session ended. It was an inside day, however, and that does not bode well for a follow through.
The DJIA remains below its 20D-SMA (21863), as it closed at 21807. It does remain above its 50D-SMA of 21731. The NDX continues to be the strongest index near term. It closed at 5951, comfortably above its 20D (5876) and 50D-SMA’s. It remains within 37 points of its closing high of 5988. The SPX continued above its 20D-SMA(2451) and 50D-SMA(2453). Critical near term support remains at 2405.
GLD (SPDR Gold ETF) pulled back somewhat yesterday to 126.81, ending a string of recent wins. Meanwhile, the VIX fell 4.9% to 11.63, putting the index back below the key 12 level.
Near term support for the NDX is at 5925 and 5900. Near term resistance is at 5975 and 5988. Near term support for the SPX is at 2453, 2451, 2450 and 2437. Near term resistance is at 2475 and 2480.
Europe is higher in early trade Thursday, and U.S. Futures are slightly higher in the premarket. On the economic data front today, we’ll see Jobless Claims at 8:30am, Productivity and Costs also at 8:30am, and the Natural Gas Report at 10:30am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Thursday. Year-to-date, DIA has gained 12.15%, versus a 11.48% 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.