Stocks Remain Firmly Overbought From A Technical Standpoint
Market technician Dave Chojnacki of Street One Financial updates the key technical levels that investors should focus on in the major U.S. averages, as stocks continue to sit in overbought territory.
The market opened lower yesterday morning, but moved higher after good Housing Numbers. The rise didn’t last long, however, and equities languished, waiting for the FOMC Minutes at 2PM.
The major averages slipped a bit after the Minutes, even though there no surprises in the notes. The Minutes suggested that the Fed is still looking for 3 rate hikes in 2017. Equities then slid sideways into the close, ending mixed in the session.
Small gains for the DJIA and NDX pushed them to new record highs once again. At the close, the DJIA was up 32.6 points, the SPX slipped 2.5 points, and the NDX inched up 1.4 points. Breadth was slightly negative, 1.3 to 1, on slightly below average volume.
ROC(10)’s declined in the session and remain in positive territory. RSI’s were mixed and remain at overbought levels. The NDX continues to be the strongest at 84.7.
All three major indices continue with their MACD above signal. The ARMS index ended the day at 1.41, a bearish level. It was a ho-hum day for equities, but as noted the DJIA and NDX moved to new highs. A slower day may be just what the market needs to digest some of the recent gains and prepare for new highs.
Once again, the averages are looking overextended, as they are near the top of their Bollinger Bands. BB Tops are: DJIA-20831, NDX-5365, and SPX-2370. We continue to see near term targets for the NDX and SPX to be 5362 and 2382, respectively.
Critical near term support is 2312 for the SPX and 5216 for the NDX. IWM (small-caps) fell 0.44% to end the day at 139.58. The VIX added 1.4% to end at 11.74. This was the second straight up day for the VIX, but volatility remains extremely low.
Near term support for the NDX is at 5350, 5325 and 5300. Near term resistance is at 5362 and 5375. Near term support for the SPX is at 2362, 2350 and 2337. Near term resistance is at 2375 and 2382.
Europe is mixed in early trade, while U.S. Futures are also mixed before the opening bell. We’ll see a bunch of major economic reports released today, including Initial/Continuing Jobless Claims at 8:30am, FHFA Housing Price Index at 9:00am, Natural Gas Inventories at 10:30am, and Crude Oil Inventories at 11:00am.
The SPDR S&P 500 ETF Trust (NYSE:SPY) rose $0.29 (+0.12%) in premarket trading Thursday. Year-to-date, SPY has gained 5.70%, versus a % rise in the benchmark S&P 500 index during the same period.
SPY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 109 ETFs in the Large Cap Blend 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.
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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