Market technician Dave Chojnacki of StreetOne Technical Analysis takes a deep dive into the underlying technicals for the major U.S. averages, which are suddenly improving by the day.
Equities got off to a good start on Tuesday, as Consumer Confidence came in slightly better than expected. Big Techs and Semi’s made a rebound after their recent bloodbath. The FANG stocks, which have been beaten down, were strong except for AMZN. AMZN continued its fall giving up 0.5%. Regardless, the NDX had a strong gain in the session. Small-caps also had a good day, with the IWM gaining 2% on the day. The DJIA and SPX also had significant gains and finished strong. The 10YR turned to the upside, ending at 3.11.
At the close on Tuesday, the DJIA added 1.7%, the SPX gained 1.5%, and the NDX moved up 1.4%. Breadth was decidedly positive, 2 to 1, on above average volume. ROC(10)’s declined in the session, with the NDX crossing back into negative territory. The DJIA and SPX remained in negative territory. RSI’s moved higher, with the DJIA now leading at 40.5. The SPX ended the day at 36.5 and the NDX at 37.6. All three major indices remain with their MACD below signal. The ARMS index ended the day at 0.64, a fairly bullish reading at the close.
The major indices bounced to the upside on Tuesday after testing levels they haven’t seen since last spring. They remain with their technical bias to the downside, but yesterday’s strong session was a boost for near term strength. All three major averages remain below their 200D-SMA. The major averages remain below their 50% retrace level.
The DJIA ended at 24874, closing near its high of the session. Its lower Bollinger Band® sits at 24137. It is below its 200D-SMA of 25136. The NDX closed at 6810, below its 200D-SMA of 7066. Its lower Bollinger Band® is now at 6659. The SPX closed at 2682, below its 200D-SMA of 2765. The SPX lower Bollinger Band® is now at 2608. The VIX finished at 23.35, down 5.4%.
Near term support for the NDX is at 6574 and 6500. Near term resistance is at 7000 and 7066. Near term support for the SPX is at 2603 and 2553. Near term resistance is at 2700 and 2725.
Europe is higher in early trade. US Futures are significantly higher premarket. Major economic reports on tap today include ADP Employment at 8:15am, Employment Cost Index at 8:30am, and Chicago PMI at 9:45am.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $1.87 (+0.75%) in premarket trading Wednesday. Year-to-date, DIA has gained 1.37%, versus a 0.74% 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 StreetOne Technical Analysis. In addition, he is Portfolio Manager for Sabretooth Advisors.
Dave develops 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.
Prior to joining StreetOne Technical Analysis, Dave designed and developed I/T Systems for the Insurance and Financial Industries.