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Apple’s Huge Day Saves Otherwise Anemic Market Averages

Market technician Dave Chojnacki of Street One Financial reviews Wednesday’s market action, including Apple’s outsized contribution to keeping the averages afloat, and updates the important technical levels that the major indexes need to hold onto.

Apple Saves An Otherwise Lackluster Day

The market gapped higher at the open yesterday, reacting to good earnings, specifically, from Apple Inc. (NASDAQ:AAPL). AAPL was up 6.1% on the day and propelled the Nasdaq 100 (NDX) to good gains.

The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) pulled back after the open and traded to the downside as traders awaited the FOMC announcement at 2PM. We didn’t see any surprises from the FOMC, although the Fed did hint that a potential March hike is not set in stone.

The averages did their typical gyrations after the announcement, but then traded in a choppy manner going into the close. All three major indices ended with gains, with the NDX the biggest winner. At the close, the DJIA was up 26.8 points, the SPX inched up 0.68 of a point, and the NDX added 0.7% (again, paced mainly by Apple’s 6.1% surge — noted that AAPL represents over 10% of the NDX holdings).

Technicals Remain Muted

Breadth was slightly negative yesterday, on above average volume. ROC(10)’s advanced for the DJIA and NDX and declined for the SPX. All three remain in positive territory. RSI’s inched up, with the NDX the strongest at 68.3. The DJIA and SPX remain in the 50’s.

The DJIA and SPX MACD continue below signal. The NDX MACD remains above signal. The ARMS index ended the day at 1.15, a neutral reading. We had the NDX making good gains on the back of AAPL, while some of the big players like INTC and MSFT had significant losses. We also saw breadth slightly negative, not a good sign when averages are heading higher.

The DJIA remains below its 20D-SMA of 19908. We have been noting the 20 day moving average lately, as the averages have been using that level as a bottom trend line. For instance, the SPX closed at 2279, just 3 points above its 20D-SMA of 2276. Critical near term support is 2250 for the SPX. It remains within striking distance of its recent 2300 intra-day high.

The VIX slipped 1.5% to finish at 11.81 and remains at very low levels. Near term support for the NDX is at 5125 and 5100. Near term resistance is at 5168, 5172 and 5188. Near term support for the SPX is at 2276, 2275 and 2250. Near term resistance is at 2288 and 2300.

Thursday Preview

Europe is mixed in early trade, while U.S. Futures are pointing lower. In terms of key economic reports on tap today, we’ll see Initial/Continuing Jobless Claims at 8:30am, Productivity/Unit Labor Costs also at 8:30am, and Natural Gas Inventories at 10:30am.

Key early earnings reports include notes from Merck and ConocoPhillips. After the closing bell today, we’ll see quarterly earnings results from heavy hitters Amazon, Visa, and Amgen, among many others.

The PowerShares QQQ Trust ETF (NASDAQ:QQQ) fell $0.26 (-0.21%) in premarket trading Thursday. Year-to-date, QQQ has gained 5.87%, versus a 1.83% rise in the benchmark S&P 500 index during the same period.

QQQ currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 32 ETFs in the Large Cap Growth 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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