A conflicting Jobs Report left investors direction-less as equities opened flat on Friday. We got a 4.9% unemployment print, but 425,000 people left the job market last month.
The major indices caught a bid during the morning hours, but could not hold the gains once we got into the PM session. Prices fell into the close ending near their lows of the day and with a small loss. At the close on Friday, the Dow Jones Industrial Average (DJIA) was down 42.3 points, the S&P 500 (SPX) lost 3.4 points, and the Nasdaq (NDX) fell 0.4%.
Relative Strength Indicators (RSI’s) moved further to the downside with the NDX and SPX falling into the 20’s. This puts the SPX and NDX in oversold territory, which isn’t unexpected after 9 straight days of losses. 10-Day Rate of Change ROC(10’s) declined, with all three major indices continuing in negative territory.
The ARMS index, which measures volume among advancing and declining stocks, ended at 1.05, a neutral reading.
For the week, the DJIA was off 1.5%, the SPX was down 1.9%, and the NDX, the biggest loser, fell 3%. The VIX continues its move to the upside, gaining 1.9% on Friday to 22.51. For the week, the volatility indicator was up 38%, reflecting the uncertainty in the market last week.
Monday Trading Trends
Longer term, the upside bias is being challenged. The NDX and SPX are below their 20-week simple moving averages (SMA’s), and the SPX is approaching its 50-week SMA of 2069. We also see the NDX and SPX nearing their 200-day SMA’s of 4535 and 2083, respectively.
Short term, the bias had switched to the downside, as the SPX dropped through its 50% retrace level of 2095. Next critical support is in the 2072 to 2083 area. A break through this level and the door is open to test the June low of 1991.
Near term, the major indices have had a protracted move to the downside and are moving into oversold territory. We would expect a bounce or consolidation before moving lower. 2095 now becomes near term resistance. Expect the election to continue volatility, even well after the election ends.
This morning, Europe is up strong in early trade. US Futures are also significantly higher in pre-market, on the back of Hillary Clinton being cleared by the FBI for a second time.
The PowerShares QQQ Trust, Series 1 ETF (NASDAQ:QQQ) rose $1.71 (+1.50%) to $115.36 in premarket trading Monday. Year-to-date, the largest Nasdaq-focused ETF has gained just 1.6%.
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./div>