Market technician Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of last week’s action and a deep dive into the underlying technicals for the major U.S. averages, which have failed to rally despite earnings season kicking into high gear.
Equities gapped to the upside on Friday morning, attempting to follow through on Thursday’s strong action. GDP came in at 2.3% and AMZN and MSFT reported good earnings. This helped to push Techs to come out of the gate strong, but they eventually began to selloff.
The major indices pulled back after their initial opening and traded flat through the remainder of the session. By the end of the session the major averages were little changed and mixed. The Nasdaq 100 (NDX) and S&P 500 (SPX) held on to small gains, while the Dow Jones Industrial Average (DJIA) slipped into the red.
At the close, the DJIA fell 11.1 points, the SPX was up 2.9 points, and the NDX added 6.7 points. Breadth was slightly positive, 1.3 to 1, on average volume. ROC(10)’s advanced in the session, with the NDX crossing back into positive territory. The DJIA remains in negative territory and the SPX continues in positive territory.
RSI’s were nearly flat, with the SPX the strongest at 50.4. The DJIA ended at 48.4 and the NDX at 49.8. All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.06, a nearly neutral reading.
Friday’s session was a bit disappointing after the good earnings reports, as equities are still weak technically. For the week, the DJIA was down 0.6%, the NDX lost 0.1%, and the SPX was off just 1 point. The 10-Year Treasury Note it the 3% handle during the week, but ended Friday at 2.96%. Interest rates and Trade issues continue to cause concern for the markets.
In order for the short term bias to reverse to the upside, the major indices need to move through their 50% retrace levels. The DJIA closed at its 20D-SMA of 24311. It is below its 50D-SMA of 24581. The SPX closed at 2669 above its 20D-SMA of 2653, but below its 50D-SMA of 2688. The NDX ended at 6656, above its 20D of 6606. The VIX fell 5.1% to 15.41, down 8.7% for the week.
Near term support for the NDX is at 6606 and 6550. Near term resistance is at 6700, 6747 and 6760. Near term support for the SPX is at 2653 and 2600. Near term critical resistance is at 2688 and 2700.
Europe is mixed in early trading Monday, while U.S. Futures are moderately higher in the premarket. Major economic reports on tap today include Personal Income at 8:30am, Chicago PMI at 9:45am, and Pending Home Sales at 10:00am.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $1.45 (+0.60%) in premarket trading Monday. Year-to-date, DIA has declined -1.79%, versus a -0.11% 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.