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Technicals Remain Strong As Stocks Are Once Again Nearing All-Time Highs

Technical analyst Dave Chojnacki of Street One Financial recaps Wednesday’s mostly bullish action, and updates the important technical levels for the major indexes as they once again approach new all-time highs.

Solid Data Helps Help Stocks Green

Equities gapped up at the open yesterday, following through on the prior session’s strength. Good Auto Sales helped to keep the averages in positive territory. Investors, anxious for the FOMC minutes, received no major surprises. The Fed did mention that more rate hikes may be needed, if the coming fiscal policy heats the economy.

Prices rose steadily into the close with all three major indices closing with moderate gains. At the close, the DJIA added 0.30%, the SPX moved up 0.57%, and the NDX gained 0.53%. Breadth was decidedly positive, 5.6 to 1, on slightly above average volume.

Technicals Update

ROC(10)’s advanced in the session, with the SPX and NDX crossing back into positive territory. RSI’s moved higher, with all three major averages in the upper 50’s to upper 60’s. MACD’s remain below signal for all three major averages. The ARMS index ended the day at 0.90, a slightly bullish reading.

As expected, the major averages continued to push toward testing the recent highs. The SPX in fact traded above its recent closing high of 2271, before closing at 2270. The DJIA and NDX are also within striking distance of their recent closing highs of 19974 and 4965, respectively. The breadth in yesterday’s market was strong at 5.6 to 1 on the NYSE. This broad strength was depicted in the IWM (Russell 2000 iShares) small-cap ETF, which rose 1.7% to 137.78. Its recent closing high sits at 138.31.

The SPX closed 14 points above its 20D-SMA of 2256. Its recent intra-day high of 2277 should provide some minor resistance in the near term. The NDX closed 27 points above its 20D-SMA of 4910. The VIX had another big move to the downside, falling 7.7% to 11.85. Near term support for the NDX is at 4925 and 4910. Near term resistance is at 4950 and 4965. Near term support for the SPX is at 2262 and 2256. Near term resistance is at 2271 and 2277.

Slew Of Data On Tap Today

Europe is mixed and little changed in early trade, while U.S. Futures are pointing lower in the pre-market. We’ll see a bevy of important economic data today, much of which has the propensity to move the markets up or down. The ADP Employment Change numbers will be released at 8:15am. Next up are the Initial/Continuing Jobless Claims at 8:30am, then the ISM Services at 10:00am. Finally, we’ll see a couple of big energy sector updates, with Natural Gas Inventories due at 10:30am and Crude Inventories at 11:00am.

The SPDR S&P 500 ETF Trust (NYSE:SPY) fell $0.57 (-0.25%) in premarket trading Thursday. Year-to-date, the largest ETF tied to the S&P 500 index has gained 1.36%.

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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