Market technician Dave Chojnacki of Street One Financial recaps Tuesday’s much-needed market pullback and updates the important technical indicators for the major U.S. averages.
Economic reports came in as expected and had little impact on equities at the open. Investors were focused on interest rates as the 10YR pushed through 3% and then through the 3.05% resistance level. It ended the day at 3.08%. This spooked traders, prompting them to sell equities. The selling was across the board, but especially hit Techs which have been the strongest recently.
The only Tech sector that did well was Semi’s, for the second straight day. The selling was orderly, as there was no mass exodus for the door. The Dow Jones Industrial Average (DJIA) ended its 8 day win streak, closing with a moderate loss. The Nasdaq 100 (NDX) and S&P 500 (SPX) ended with moderate to significant losses.
At the close, the DJIA fell 0.78%, the SPX lost 0.68%, and the NDX was down 1%. Breadth was decidedly negative, 1.8 to 1, on average volume. ROC(10)’s declined in the session, however, all three major indices remained in positive territory.
RSI’s fell, with the NDX still the strongest at 58. The DJIA is now at 56.1 and the SPX at 57. All three major averages continue with their MACD above signal. The ARMS index ended the day at 0.88, a slightly bullish reading.
The DJIA moved back in the negative for the year, falling below its 2017 close of 24719. The major indices did hold on to key technical support. The DJIA closed at 24706 and remains above its 50D-SMA of 24424. It continues to be unable to push through the 50% retrace level of 25074.
The SPX closed at 2711, falling back below its 50% retrace level of 2726. It continues to hold its 50D-SMA of 2678, which becomes critical near term support. The NDX was the biggest loser on the day ending at 6888. It does remain above its 50% retrace level of 6760. The NDX did see its 20D-SMA cross above its 50D-SMA, improving its short term technical strength. The 20D-SMA is now at 6744. The VIX spiked 13.1% to end at 14.63.
Near term support for the NDX is at 6800 and 6744. Near term resistance is at 7000 and 7131. Near term support for the SPX is at 2700 and 2678. Near term critical resistance is at 2726 and 2750.
Europe is mixed in early trade Wednesday, and U.S. Futures are also mixed in the premarket. Major economic reports on tap include Housing Starts at 8:30am, Industrial Production at 9:15am, and the EIA Oil report at 10:30am.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF fell $0.21 (-0.08%) in premarket trading Wednesday. Year-to-date, DIA has declined -0.03%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.
DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #3 of 81 ETFs in the Large Cap Value ETFs category.