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Market Technicals Show A Big Divergence Forming

Friday, November 11, 2016 6:49
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Technical analyst Dave Chojnacki recaps Thursday’s market action, where a clear division of winners and losers began to emerge in the major indexes.

Equities started the day following through on the prior session’s strength, but quickly went their separate ways.   The Dow Jones (DJIA) opened strong and stayed that way through the session.  The S&P 500 (SPX) and Nasdaq (NDX) were more volatile and moving in different directions.

SPX had a choppy session and ended up slightly higher.  The NDX gave up significant price in the morning and then moved sideways through the PM session, ending down significantly.  At the close, the DJIA was up 1.1%, the SPX inched up 4.2 points, and the NDX lost 1.6%.  Breadth was negative, 1.2 to 1, on heavy volume.   

10-Day Rates of Change (ROC(10)’s) were mixed, with the DJIA and SPX advancing and remaining in positive territory.  The NDX declined and remained in negative territory.   Relative Strength Indicators (RSI’s) were also mixed, with the DJIA and SPX moving higher, and the DJIA ending at 71.3.  The NDX finished at 44.3.

The DJIA and SPX remain with their MACD above signal, while the NDX continues below.  The ARMS index ended the day at 0.60, a fairly bullish reading.

Yesterday was another day where sector rotation was the name of the game.   Again we saw money coming out of Techs and moving into Industrial and Financial sectors.  This is the reason for the DJIA moving to new all-time highs of 18807(closing) and 18873(intra-day).  We also saw the XLI (SPDR Industrials) ending at 60.94, a new all-time high.  The NDX moved in the opposite direction and fell through its 20D(4802) and 50D-SMA(4816). It remained below 4760, with next critical support at 4647.

The SPX was little changed, but remained above the 2162 support level and above its 20 and 50D-SMA’s.   It traded as high as 2182, just 8 points shy of its all-time closing high of 2190.  The VIX inched up 2.5% to finish at 14.74.  Near term support for the NDX is at 4725 and 4700. Near term resistance is at 4760 and 4802.  Near term support for the SPX is at 2162 and 2147.  Near term resistance is at 2179 and 2190.

Europe is up moderately in early trade. US Futures are pointing lower in the pre-market.

The SPDR S&P 500 ETF Trust (NYSE:SPY) fell $0.62 (-0.29%) to $216.30 per share in premarket trading Friday. Year-to-date, the largest fund tied to the S&P 500 index has gained 6.4%.

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 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./div>

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