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Sector Rotation Dominates Trump-Fueled Market Action

Thursday, November 10, 2016 7:09
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Futures were significantly lower election night, but by the open yesterday, much of the drop had eroded.  When the market opened prices were lower, but nowhere near, where futures were pointing overnight.

By late morning, buyers stepped in and began pushing prices to the upside.   Volume increased and the rally continued through the afternoon hours. By the end of the day, the major averages saw moderate to significant gains.    At the close, the DJIA was up 1.4%, the SPX added 1.1%, and the NDX gained 0.42%.  Breadth was  positive, 1.2 to 1, on heavy  volume.   ROC(10)’s advanced across the board with the SPX joining the DJIA in positive territory.  The NDX remains in negative territory.  RSI’s moved higher, with the DJIA the strongest at 68.3. The SPX and NDX ended in the 50’s.  The DJIA and SPX remain with their MACD above signal, while the NDX continues below.

The ARMS index ended the day at 0.47, a bullish reading.   It was a wild ride for the Futures, but by the time the market opened action was relatively calm.   We saw heavy volume, but positive breadth was not that strong.

What we did see was considerable sector rotation.  Money was coming out of Techs and moving into Bio’s, Healthcare and Financials.  This rotation lead to the DJIA trading at one point above its all-time closing high of 18636.  It now sits comfortably above its 50D-SMA of 18217. The SPX traded as low as 2125, but ended the day a point above the resistance level of 2162.  It holds 17 points above its 50D-SMA of 2146. The NDX was the weakest index on the day as some money moved out of Techs.   It remains above its 50D-SMA(4816) and 20D-SMA(4805).  The VIX finished significantly lower at 14.38.  Near term support for the NDX is at 4816 and 4805.  Near term resistance is at 4850 and 4875.  Near term support for the SPX is at 2162 and 2147.  Near term resistance is at 2170 and 2179.

Europe is up moderately in early trade this morning, while US Futures are pointing higher in the pre-market.

The SPDR S&P 500 ETF Trust (NYSE:SPY) rose $0.86 (+0.40%) to $217.30 per share in premarket trading Thursday. Year-to-date, the largest fund tied to the S&P 500 index has gained 6.17%.

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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