Technical analyst Dave Chojnacki recaps yesterday’s market action, which indicated a complete lack of worry about a Trump win, and gives investors a preview of what to expect today.
Yesterday as Americans went to the polls, the market opened slightly lower and moved sideways till late morning, when equities began to tick to the upside.
The major averages hit their highs of the day near mid-afternoon and then traded sideways into the close. Volume dropped off as the major indices closed modestly higher at the end of the day. Investors appeared somewhat hesitant to take big positions until after the election.
At the close, the Dow Jones Industrial Average (DJIA) gained 0.4%, the S&P 500 (SPX) added 0.38%, and the Nasdaq (NDX) moved up 0.65%. Breadth was slightly positive, 1.3 to 1, on below average volume. 10-Day Rate of Changes (ROC(10)’s) advanced with the DJIA remaining in positive territory, while the NDX and SPX remained in negative territory.
Relative Strength Indicators (RSI’s) moved slightly higher, with all three major indices now back into the 50’s. The DJIA and SPX had their MACD’s cross above signal, while the NDX remains just below. This reflects the strength in the last two sessions, which in hindsight was a false tell. The ARMS index ended the day at 0.97, a neutral reading.
The averages moved to the downside for 9 straight days, but in only 2 days nearly erased all of those losses into Election Day. The SPX traded as high as 2146 in yesterday’s session, just 5 points below the high before the 9 day pullback. The SPX closed 5 points above the 2015 closing high of 2134, and met resistance right at the 50-day simple moving average (50D-SMA) of 2146 during the day. The 2147 level is the pivot point to turn near term bias positive. Meanwhile, the DJIA and NDX have seen their near term bias turn positive. The NDX closed 4 points above the 4800 level. It remains just below its 20-day simple moving average (20D-SMA) of 4805 and 11 points below its 50D-SMA of 4815.
With the Trump win, futures are pointing significantly lower, as a Clinton victory was clearly priced into the market. The key support levels to watch today are DJIA at 17883 and 17713, NDX at 4647 and 4541, and SPX at 2083, 2074 and 1991.
Europe is down significantly in early trade. With the VIX ending at 18.74 yesterday, look for more volatility today.
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>