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Technicals Indicate Stocks May Be Topping Soon

Technical analyst Dave Chojnacki of Street One Financial recaps Wednesday’s Trump press conference-fueled market action and points out an important technical topping formation seen in all three major indexes.

Inside The Trump Bump

Equities opened higher and moved to the upside until we received the Oil Inventory Report. The major indices reversed after a bigger than expected build. Despite the report, oil prices and energy issues were up on the day.

The major averages were choppy for the rest of the session, but ended near their highs of the day and in positive territory. The Nasdaq 100 (NDX) made it 7 in row up days and registered new highs. The Dow (DJIA) and S&P (SPX) came close to new highs, but fell just short.

The DJIA was the strongest index on the day, helped by energy issues. At the close, the DJIA added 0.5%, the SPX gained 0.38%, and the NDX moved up 0.3%. Breadth was a positive, 2 to 1, on below average volume.

Topping Indicators Seen

ROC(10)’s were mixed, with the DJIA moving back into positive territory. The SPX advanced in the session, while the NDX declined, with both remaining in positive territory. RSI’s were higher in the session, with the NDX leading the way at 67.5. MACD’s remain below signal for the DJIA and SPX and above signal for the NDX. The ARMS index ended the day at 1.15, a slightly bearish reading. All 3 major indices developed ‘hanging man’ candlesticks in the session. This is typically seen as a topping indicator. Something to keep in mind as we near the new president taking office.

Once again, the NDX made new highs of 5050 closing and 5050 intra-day. It continues comfortably above its 20D-SMA of 4951. The SPX closed just one point below its closing high of 2276, established last week. It continues above its 20D-SMA of 2263. The DJIA got back above its 20D-SMA of 19889, closing just 9 points below last week’s closing high of 19963.

The DJT (Dow Transports) had a second straight good session, up 1%. Meanwhile, the VIX fell 2% to finish at 11.26.

Near term support for the NDX is at 5025 and 5007. Near term resistance is at 5050 and 5075. Near term support for the SPX is at 2271 and 2263. Near term resistance is at 2276 and 2282.

What To Watch Today

Europe is lower in early trade this morning, while U.S. Futures are pointing lower in the premarket. As far as economic data on tap today, we’ll see the Export/Import Prices at 8:30am, Initial/Continuing Job Claims also at 8:30am, and the Natural Gas Inventories numbers at 10:30am.

The SPDR S&P 500 ETF Trust (NYSE:SPY) fell $0.51 (-0.22%) in premarket trading Thursday. Year-to-date, the largest ETF tied to the S&P 500 has gained 1.60%.

SPY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 108 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.

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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