Market Technician Dave Chojnacki of Street One Financial recaps the trading action from the first market day of 2017, and provides an update to the technical levels investors and traders should key on for the rest of the week.
A Bullish Start To The New Year
Equities opened the day and the year with a strong push to the upside at the open yesterday. Better than expected Construction Spending and ISM numbers helped keep the market higher. The momentum did not last long, however, as equities began to reverse after the first hour.
Trading through most of the PM was flat, but equities held on to small gains. The last hour and a half saw buyers step in and push prices higher going into the close. A pick-up in volume on the day saw the major averages finish with moderate gains. At the close, the DJIA was up 0.6%, the SPX higher by 0.85%, and the NDX gained 0.98%.
Breadth was decidedly positive, 3 to 1, on above average volume.
ROC(10)’s advanced in the session, with the DJIA moving back into positive territory. The SPX and NDX remained in negative territory. RSI’s were slightly higher, with all three major averages remaining in the mid 50’s to upper 60’s. MACD’s remain below signal for all three major averages. The ARMS index ended the day at 0.74, a bullish reading.
Volume picked up, as we began the new year, as investors were back in buying and rebalancing their portfolios. All three major averages moved back within the boundaries of their recent ‘Bull Handle’. This sets the stage for the major indices to retest the recent highs.
The SPX and NDX moved back above their 20D-SMA’s of 4902 and 2252, respectively. After the weakness we had seen the week before, yesterday’s action was encouraging. We saw good breadth, good momentum and good volume in yesterday’s session.
The SPX sits just 14 points below its closing high of 2271. The NDX is 54 points away from its closing high of 4965. The VIX ended its string of up days by falling 8.4% to 12.85. Near term support for the NDX is at 4902 and 4900. Near term resistance is at 4925 and 4950. Near term support for the SPX is at 2252, 2250 and 2238. Near term resistance is at 2262 and 2271.
Europe is mostly lower in early trade, while U.S. Futures are pointing slightly higher in the pre-market. We have a couple of major economic data points on tap today, with the Auto Sales numbers at 10:00am and FOMC Minutes at 2:00pm.
The PowerShares QQQ Trust ETF (NASDAQ:QQQ) rose $0.16 (+0.13%) in premarket trading Wednesday. Over the past year, QQQ has gained 7.47%, versus a 11.63% rise in the benchmark S&P 500 index during the same period.
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.