After A Big Week Of Gains, Stocks Begin To Look A Little Expensive

Technical analyst Dave Chojnacki of Street One Financial wraps up the trading week and month with a deep dive into the technicals for the major U.S. indexes, which look poised to close out the week with very solid gains.

Economic reports disappointed on Thursday, but equities were somewhat buoyed by decent earnings reports. Prices got off to a slow start, and then the major indices went their separate ways. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) moved lower early, while the Nasdaq 100 (NDX) caught a bid and trekked higher.

Good Tech and Semiconductor earnings helped push the NDX to new highs once again. Volume was somewhat lethargic, however. Energy and Materials were the weakest sectors.

The major averages ended Thursday with little change, but still positive on the day. At the close, the DJIA gained just 6.2 points, the SPX inched up 1.3 points, and the NDX added 30.2 points. Breadth was slightly negative, on average volume. ROC(10)’s advanced with all three major averages ending in positive territory.

RSI’s moved higher with the NDX continuing to lead at 74.6, slightly over-bought. The SPX and DJIA ended the day at 63. All three major averages remain with their MACD above signal. The ARMS index ended the day at 1.58, fairly bearish at the close.

It was a rather dull session, except for the NDX crawling to new highs of 5571 (close) and 5573 (intra-day). The NDX is a little stretched, with a high RSI and closing above its upper Bollinger Band® of 5553. The DJIA and SPX closed right at or near their upper Bollinger Bands of 20982 and 2388, respectively.

The NDX is comfortably above near term moving averages. The DJIA and SPX continue with their 50D-SMA above their 20D-SMA. They are beginning to pull above their 50D-SMA’s: DJIA-20753 and SPX-2362.

The DJIA and SPX remain within 1% of their all-time closing highs. IWM (iShares Russell 2000) ended the day near flat, slipping just 0.04 points to 140.95. The VIX finished down 4.5% to 10.36, continuing its recent slide.

Near term support for the NDX is at 5550 and 5525. Near term resistance is at 5575 and 5600. Near term support for the SPX is at 2388 and 2375. Near term resistance is at 2400 and 2412.

Europe is mixed in early trade, as are U.S. Futures. Major economic reports on tap today include GDP and Employment Cost Index at 8:30am, Chicago PMI at 9:45am, and Michigan Consumer Sentiment at 10:00am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.06 (-0.03%) in premarket trading Friday. Year-to-date, DIA has gained 6.10%, versus a 6.74% 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 #5 of 75 ETFs in the Large Cap Value ETFs category.

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.

About the Author: Dave Chojnacki

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.

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