Technical analyst Dave Chojnacki of Street One Financial examines Wednesday’s mixed market action that was hurt by weak energy prices, and updates the important technical levels to watch as the U.S. averages continue to consolidate.
Futures were pointing lower before yesterday’s market open, but a blowout number in the ADP Employment report had equities moving to the upside at the bell. The major averages quickly moved lower, however, and inched back into negative territory.
The averages then traded in a narrow range, with the NDX maintaining a positive bias. The Oil Inventory report was decidedly higher, and pushed Energy prices and related issues to the downside. DBO (PowerShares Oil Fund), for example, fell 4.4% to $8.80 on the day.
Energy issues had a negative effect on the DJIA and SPX, as they gave up ground in the PM hours. By the final bell, the major indices were little changed and mixed. At the close, the DJIA fell 0.33%, the SPX slipped 5.4 points, and the NDX added 8.5 points. Breadth was decidedly negative, 2.75 to 1, on below average volume for the third straight session.
ROC(10)’s were mixed, with the NDX the only index advancing. All three remain in positive territory. RSI’s were slightly lower, with all major averages in the 60’s. The NDX is now the strongest index near term at 67.9. The DJIA joined the NDX and SPX with its MACD falling below signal. With all three major indices now below signal, we can see continuing near term weakness.
The ARMS index ended the day at 1.46, a bearish level. The major averages have now consolidated or pulled back for the last 4 sessions. They’ve clearly been catching a breather since last Wednesday’s record highs.
The SPX ended the session at 2362 a designated support level and below the gap it closed in the prior session. We would expect it to test its 20D-SMA of 2354. The 20D-SMA should serve as support for the DJIA(20696) and NDX(5317). The VIX added 3.5% in Wednesday’s session to 11.86.
Near term support for the NDX is at 5350 and 5325. Near term resistance is at 5362 and 5375. Near term support for the SPX is at 2362 and 2354. Near term resistance is at 2375 and 2388.
Europe is lower in early trade, while U.S. Futures are pointing slightly lower in the premarket. Today is another busy day for major economic data releases, with the Challenger Job Cuts report due at 7:30am, Export/Import Prices and Initial/Continuing Jobless Claims both at 8:30am, and Natural Gas Inventories at 10:30am.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.31 (-0.15%) in premarket trading Thursday. Year-to-date, DIA has gained 5.62%, versus a 5.83% rise in the benchmark S&P 500 index during the same period.