Market technician Dave Chojnacki of Street One Financial wraps up the trading week with a deep look at the major U.S. averages, and updates the technical levels investors should be focusing on.
The Market opened lower yesterday morning, despite the lowest Initial Employment Claims in some time. They came in at 223K versus market expectation of 244K. Equities continued a slow move lower, as investors waited for the big story of the day, which was the SNAP IPO. It was a successful launch, as the stock opened at 24.00 and closed at 24.48, 44% above its initial offer price.
The major indices continued their fall through the PM hours, however, and accelerated their fall in the last hour. By the final bell, all three major averages had moderate losses. At the close, the DJIA fell 0.53%, the SPX lost 0.59%, and the NDX gave up 0.51%.
Breadth was decidedly negative, 2.75 to 1, on below average volume. ROC(10)’s declined, but remain in positive territory for all three major indices. RSI’s pulled back somewhat, but remain in the 70’s and slightly overbought.
The NDX MACD moved back below signal, while the DJIA and SPX continued above. The ARMS index ended the day at 0.78, a bullish level, despite the last hour sell-off. Normally after a strong upside session, like we had on Wednesday, one would have expected a follow through on the following day. There was no major news to impact equities, so we can chalk it up to a normal pause in a market rally.
The NDX is now flirting between above and below signal with its MACD. This needs to be monitored, as the MACD is an excellent near term prognosticator. The NDX closed one point above its previous target of 5362, which became a support level. Its 20D-SMA is now at 5278. Its Bollinger band top is now at 5429.
The SPX closed at 1 point below its previous target of 2382. Its 20D-SMA is 2338. BB top is at 2405. The VIX finished at 11.81, down 5.8%.
Near term support for the NDX is at 5362 and 5350. Near term resistance is at 5375 and 5400. Near term support for the SPX is at 2375 and 2362. Near term resistance is at 2388 and 2400.
Europe is mixed in early trade, while U.S. Futures are pointing slightly lower in the premarket. The only major economic report on tap for today is the ISM Services numbers at 10:00am.
It’ll be interesting to see how the major averages react after yesterday’s sell-off, as the Dow attempts to hold the 21K level.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.11 (+0.05%) in premarket trading Friday. Year-to-date, DIA has gained 6.27%, versus a 6.59% 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.