Stock Technicals Still Look Bullish As We Close Out 2016

Technical analyst Dave Chojnacki of Street One Financial examines Thursday’s muted low-volume market action, and previews the final trading day of 2016.

Indexes Little Changed On Thursday

The market opened slightly higher yesterday, on Initial Claims numbers that were in line. Equities quickly reversed and began sliding to the downside. It was a lackluster session in the PM as the major averages moved in a very narrow range on little volume.

By the end of the day, the averages were little changed but in negative territory. When we look at the internals, breadth was positive. The money was flowing into sectors of safety. We saw positive moves in the Consumer Staples and Utility Sectors. At the close, the DJIA gave up 13.9 points, the SPX inched down 0.66 of a point, and the NDX lost 8 points. Breadth was positive, 1.5 to 1, on below average volume.

Technicals Update

ROC(10)’s advanced in the session, with the DJIA moving back into positive territory. The SPX and NDX remained in negative territory. RSI’s were slightly lower, but all three major averages remain in the mid 50’s to upper 60’s. The NDX joined the other major indices with its MACD crossing below signal. This is a result of the recent sideways and weak action.

The ARMS index ended the day at 1.19, a slightly bearish reading. It was a ho-hum day with the major indices trading in a narrow range on low volume. Most investors are probably properly positioned for the year and perhaps just establishing some defensive positions, as we go into a long holiday weekend.

All three major indices developed ‘Doji’s’ in the session. The DJIA remains above its 20D-SMA of 19709 and near term support of 19750. The NDX is 31 points above its 20D-SMA of 4887. The SPX found support in the session at its 20D-SMA of 2244. Its 20D-SMA has now risen to 2247. The SPX closed 2 points above this level.

The VIX closed higher for the fifth straight day, finishing up 0.42% at 13.37. Some analysts believe volatility will return in earnest to the markets next year, but considering how muted volatility has been for so long, we’ll believe it when we see it.

Near term support for the NDX is at 4900 and 4887. Near term resistance is at 4925 and 4950. Near term support for the SPX is at 2247, 2241 and 2225. Near term resistance is at 2250 and 2262.

The Last Trading Day Of 2017

Europe is slightly higher in early trade, while U.S. Futures are pointing higher in the pre-market. Remember that today is the final trading day of 2016, and that Monday the markets will be closed in observance of New Year’s Day.

The only major economic report on tap today is the Chicago PMI, which we’ll get at 9:45am Eastern.

The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) rose $0.32 (+0.27%) in premarket trading Friday. Year-to-date, QQQ has gained 7.62%, versus an 11.19% 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 31 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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