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Technology Leads, Thanks To Biotech Takeovers, While The Dow Lags

Technical analyst Dave Chojnacki of Street One Financial recaps yesterday’s market action, which saw the Nasdaq 100 seemingly regain the leadership role among the major U.S. indexes.

There was not much economic news to move the market yesterday morning, and the major indices opened mixed. News of strong oil production had oil prices sliding, and this had an impact on the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX).

Continued movement into Technology stocks and funds, along with several Biotech takeovers, helped sparked the Nasdaq 100 (NDX) into positive territory. The NDX rose steadily through the session, finishing with a small gain and reaching new highs. In contrast, The DJIA and SPX had a choppy session and closed with small losses.

At the close, the DJIA fell 0.38%, the SPX lost 0.35%, and the NDX gained 0.36%. Breadth was a negative, 2 to 1, on below average volume.

Tech Technicals Display Newfound Leadership

ROC(10)’s were mixed in the session, with the DJIA and SPX declining and the DJIA moving back into negative territory. The NDX advanced and remained in positive territory. RSI’s were also mixed, with the DJIA and SPX moving lower and the NDX gaining a few points.

The NDX, which had been underperforming the other major indices, is now the strongest near term. MACD’s remain below signal for all the DJIA and SPX and above signal for the NDX. The ARMS index ended the day at 1.5, a bearish reading. It was a tale of 2 markets, with the NDX moving to new highs.

The NDX had an intraday high of 5033 and closed at 5024. As noted, the NDX is now the strongest of the indices near term and continues its break-out to new highs. It has near term support at its 20D-SMA which is at 4935.

The SPX and DJIA, though falling in the session, remain within the range of the ‘bullish handle’ and are poised to test last week’s highs. They DJIA and SPX finished at their lows of the session, but remain above their 20D-SMA’s of 19877 and 2261, respectively.

The VIX rose for the first time in 5 sessions yesterday to 11.56, up 2.1%. Near term support for the NDX is at 5007 and 5000. Near term resistance is at 5033 and 5050. Near term support for the SPX is at 2262, 2261 and 2250. Near term resistance is at 2271 and 2276, 2277.

Tuesday Preview

Europe is mixed in early trade, while U.S. futures are slightly higher in the pre-market. The only two pieces of major economic data we’ll see today are the JOLTS Job Openings numbers and Wholesale Inventories data, both at 10:00am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading Tuesday. Year-to-date, DIA has gained 0.63%, versus a 1.31% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #6 of 76 ETFs in the Large Cap Value 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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