Technical analyst Dave Chojnacki recaps Monday’s market action and updates the key technical levels that investors and traders should focus on for signs of a pullback.
The market opened slightly lower yesterday and then traded in a choppy fashion. After a brief rally, which began after the Euro close, prices headed downward and continued falling into the close.
The major indices ended with small to moderate losses, with the S&P 500 (SPX) taking the biggest hit. Energy issues were largely to blame, as OPEC continues to fail to agree on oil production quotas.
The Dow Jones Industrial Average (DJIA) and SPX were due for consolidation after the recent rally. At the close, the DJIA gave up 0.28%, the SPX fell 0.53%, and the Nasdaq 100 (NDX) slipped 0.22%. Breadth was decidedly negative, 2 to 1, on average volume. 10-day Rates Of Change (ROC(10)’s) declined in the session, but all three major indices remained in positive territory.
Relative Strength Indicators (RSI’s) moved slightly lower, with the SPX falling to 64.2. All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.06, a neutral reading.
Yesterday’s little pullback was expected and overdue for the DJIA and SPX which were slightly overbought. Consolidation at these levels is healthy if the indices are to continue to new highs. The DJIA developed a ‘Doji’ (candlestick) in the session, hinting of reversal. The NDX developed a “Gravestone ‘Doji’,” indicating it too may see more weakness. The SPX, the weakest in the session, developed a ‘bearish’ candle, which is signaling additional weakness near term.
The SPX is comfortably above critical near term support, so we see perhaps just a brief pause before attempting to test the recent high of 2213. The NDX has yet to retest its October highs of 4909-4911. It continues to hold above its 50D-SMA of 4823, and comfortably above its 20D-SMA of 4787. The VIX was up 6.5% to move back above the 12.50 level, to finish the day at 13.15. Near term support for the NDX is at 4850 and 4823. Near term resistance is at 4875 and 4900. Near term support for the SPX is at 2190, 2188 and 2175. Near term resistance is at 2212, 2213 and 2225.
Europe is mixed in early trade this morning, while U.S. Futures are slightly higher.
Economic reports to look out for today include GDP at 8:30am, the Case-Shiller 20-city Index at 9:00am, and Consumer Confidence at 10:00am.
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 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.