Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with an update of the important technical levels for the U.S. averages, and notes that the long-term bullish outlook is still in tact.
After 3 days of the major indices moving to the downside, some traders were willing to buy the dip on Friday. The indices traded in a narrow range on below average volume throughout the day.
The Nasdaq 100 (NDX) was the biggest gainer on Friday, as it also took the biggest hit earlier in the week. By the end of the day, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) eked out small gains, while the NDX ended with moderate gains.
At the close, the DJIA gained 14.3 points, the SPX inched up 3.1 points, and the NDX added 0.75%. Breadth was slightly positive, 1.1 to 1, on below average volume. ROC(10’s) were mixed, with only the DJIA declining. RSI’s were slightly higher, with the DJIA continuing to lead at 55.6. The ARMS Index finished at 1.36, a bearish reading.
For the week, the major indices pulled back slightly on geopolitical issues: the DJIA fell 1%, the SPX lost 1.4%, and the NDX gave up 1.1%. The VIX finished at 15.51 on Friday, up over 50% for the week. This week we get Retail Sales and some Housing Numbers, which could potentially sway the markets in either direction.
Long term, the upside bias continues. Despite last week’s minor pullback, the major averages remain above their major long averages. 20 Week moving averages sit at: DJIA – 21203, SPX-2414, and NDX – 5690. We note that the SPX is just 27 points above its 20WK average.
Short term, we are watching some key levels for a possible breakdown. The NDX and SPX broke their 50D-SMA’s last week. The NDX moved back above its 50D of 5807 on Friday, while the SPX stayed below its 50D of 2448. Critical short term breakdown is 5597 for the NDX and 2405 for the SPX. Near term, we want to see the averages get back above their 20D-SMA’s(NDX-5900, SPX-2469) to resume their upside bias.
Europe is moderately higher in early trade Monday, and U.S. Futures are strongly higher in the premarket. There are no major economic reports on tap today, so we could be in for a rather dull session as the summer begins to wind down.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.98 (+0.45%) in premarket trading Monday. Year-to-date, DIA has gained 11.99%, versus a 10.22% 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.