Retail Sales came in better than expected but near-term technicals are weak

Market technician Dave Chojnacki of StreetOne Technical Analysis

Retail Sales came in better than expected and Initial Claims came in where expected.  Equities opened lower and it looked like we were headed for the sixth straight down day for the SPX.   By mid-morning the major indices began to reverse. Tech issues gained strength by late morning. Hopeful news regarding the China trade deal sent the market roaring in the PM.   The NDX spiked in the PM going into the final bell with significant gains. The DJIA and SPX finished with significant gains. The 10YR ended the session at 3.12%, keeping rates in check.                                                                                

At the close on Thursday, the DJIA was up 0.83%, the SPX gained 1%, and the NDX spiked 1.78%.  Breadth was positive, 1.4 to 1, on above average volume. ROC(10)’s were mixed with the DJIA declining and the SPX flat.  The NDX rose in the session. All three major indices remain in negative territory. RSI’s advanced in the session, with the DJIA continuing to lead at 46.4.  The NDX rose to 44.3 and the SPX finished at 45.8. All three major indices remain with their MACD above signal. The ARMS index ended the day at 0.73, a bullish reading at the close.    

Near-term technicals continue to be weak, but yesterday’s major reversal gives hope for the future.  The DJIA remains the only major index back above its 200D-SMA. The DJIA closed the session at 25289, above its 200D-SMA of 25094.   It closed right at its 20D-SMA of 25289. It continues well below its 50D-SMA of 25813. The NDX ended at 6890, below its 20D-SMA of 6959. The NDX remains below its 50% retrace level of 7059.   The NDX 200D-SMA is currently at 7069. The SPX closed at 2730, just above its 20D-SMA of 2727. It remains below its 200D-SMA of 2760. The VIX ended at 19.98 down 5.9%. Near term support for the NDX is at 6702 and 6574.  Near term resistance is at 6959 and 7069. Near term support for the SPX is at 2700 and 2670. Near term resistance is at 2760 and 2775. Europe is lower in early trade. US Futures are lower premarket.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) was trading at $252.81 per share on Friday afternoon, up $0.20 (+0.08%). Year-to-date, DIA has gained 3.05%, versus a 2.55% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

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.

About the Author: Dave Chojnacki

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.