Technical analyst Dave Chojnacki recaps Tuesday’s market action and updates the key technical levels that investors and traders should focus on, and previews today’s bullish setup led by an imminent OPEC deal.
Inside Tuesday’s Up-And-Down Action
After moving slightly lower in the first half hour yesterday, equities began a steady move to the upside. Tech stocks were strong and helped to push the Nasdaq 100 (NDX) higher. Equities gained strength through the afternoon hours as the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) were close to testing their highs.
A sell-off ensued in the last hour pushing prices lower, however, with the three major indices closing with just small gains. The Nasdaq Composite traded at an all-time high during the session (5403), but wound up closing much lower than that. At the close, the DJIA added 23.7 points, the SPX inched up 2.9 points, and the NDX moved up 16.1 points.
Technicals Look Mostly Bullish
Breadth was slightly negative, on average volume. 10-Day Rates Of Change (ROC(10)’s) advanced in the session, with all three major indices remaining in positive territory. Relative Strength Indicators (RSI’s) inched up, with the DJIA measuring slightly overbought at 73.
All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.31, a somewhat bearish reading, indicating the end of day sell-off. Yesterday’s slight gains reflected the consolidation we have been expecting following the huge post-Trump rally.
The DJIA traded as high as 19144 yesterday, just 8 points from its all-time high set on 11/25. The SPX traded just 3 points from its 11/25 high of 2213. The NDX, which was the strongest of the major indices, closed 36 points below its October closing high of 4909. The NDX still remains comfortably above its 50-day simple moving average (50D-SMA) of 4825.
The NDX is forming a ‘Bull’ handle, suggesting that it is poised to test the recent highs and possibly push through. The SPX, which came close to testing its recent high, sits comfortably above its 20D-SMA (2163) and 50D-SMA (2154). Critical near term support for the SPX is at 2147-2149.
The VIX was off 1.9% on Tuesday to finish at 12.90, but remained above the 12.50 level. IWM (Russell 2000) was down for the second day after a big run.
Near term support for the NDX is at 4850 and 4825, while near term resistance is at 4875 and 4900. Near term support for the SPX is at 2200, 2190, and 2188. Near term resistance is at 2212, 2213 and 2225.
Markets Up On OPEC Deal News
Europe is up significantly in early trade, and U.S. Futures are pointing higher in the pre-market following news that an OPEC production cut deal is imminent.
We’ll see a slew of major economic data released today, including:
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.