Economic news was encouraging on Tuesday morning, however, equities were having a hard time getting out of their own way. The market was choppy through most of the AM hours, and the early part of the afternoon.
It wasn’t until the final two hours that stocks caught a bid and rallied into the close. The rally was strong enough to push all three major averages to new highs, despite closing only slightly higher. The Dow Jones Industrial Average (DJIA) briefly hit the 23000 mark during the session.
Volume was again not convincing, however, and momentum continued to slow. At the close, the DJIA added 40.4 points, the S&P 500 (SPX) inched up 1.7 points, and the Nasdaq 100 (NDX) gained 8 points. Breadth was slightly negative, 1.3 to 1, on below average volume. ROC(10)’s declined, but all three major indices remain in positive territory. It continues to indicate the slowing momentum.
RSI’s inched up in the session, with the DJIA the strongest at 82. The NDX finished at 70.2 and the SPX at 74.5. MACD’s remain above signal for all three major indices. The ARMS index ended at 0.92, a slightly bullish reading.
It was another session where the major indices made new highs. All three are becoming overbought and momentum continues to slow. Small caps continue to consolidate, as we saw the IWM (iShares Russell 2000) fall to 148.81. The negative breadth was a good indication of the overall market.
The DJIA closed at 22997 and hit 23002 in the session. It remains comfortably above its 20D-SMA at 22618. The NDX closed at 6122 a new high and its high of the session. Its 20D sits at 6007. The SPX closed at 2559, and traded as high as 2559.71, both new highs. The VIX moved up 4% to 10.31.
Near term support for the NDX is at 6100 and 6075. Near term resistance is at 6125 and 6140. Near term support for the SPX is at 2550 and 2537. Near term resistance is at 2562 and 2572.
Europe is higher in early trade Wednesday, while U.S. Futures are pointing higher in the premarket. Economic data on tap today include Housing Starts at 8:30am, EIA Petroleum Report at 10:30am, and the Fed Beige Book at 2:00pm.
The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.95 (+0.41%) in premarket trading Wednesday. Year-to-date, DIA has gained 18.11%, versus a 15.35% 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.