With Nasdaq Finally Joining In, Stocks Look Bullish Through EOY

Market technician David Chojnacki of Street One Financial reviews last week’s mixed market action and updates the technical levels investors should focus on as we head into the end of the year.

Friday Recap

Despite poor Housing numbers before the bell, equities opened slightly higher.  The major indices quickly reversed and began a steady slide to the downside, however.  The downside move lasted through most of the day, and only buying just before the closing bell kept the averages off their lows of the day.

Volume was up significantly, mainly as a result of options expiration day.  Losses on the day were small and the major indices moved sideways in the last 3 sessions of last week.  At the close on Friday, the DJIA slipped 8.9 points, the SPX inched down 3.9 points, and the NDX fell 18.5 points.

Breadth was slightly positive, on heavy volume.  RSI’s were little changed.  The ARMS Index ended slightly bearish at 1.15. For the week, the DJIA added 0.4%, the SPX lost 1 point, and the NDX gained 0.3%. The VIX fell 4.6% on Friday to finish at 12.20.  For the week, the VIX was up 3.8%.

This week will be light for economic reports, but we do get some key numbers: GDP, Durable Orders, Leading Indicators and New Home Sales will all arrive in time for Christmas.

Trading Trends

Long term, we saw the major indices making new highs last week, and the NDX finally joining in. The NDX high confirms the previous highs in the Dow and SPX. After making those highs early in the week, we saw the averages consolidate and move sideways for the last 3 sessions.

This is healthy in that it removes some of the overbought levels and sets the stage for further upside moves.  Short term, the bias remains to the upside for all 3 major indices.  Near term, equities are comfortably above Fibonacci retracements levels.

Critical near term support for the 3 major averages is: DJIA – 19500, SPX – 2188, NDX – 4723. The 50D-SMA for the NDX is 4822 and 2173 for the SPX.  The SPX hit the 2277 target last week and next level above is 2292.  The DJIA remains slightly overbought with an RSI of 79.

Muted Monday

Europe is mixed in early trading this morning, while U.S. Futures are pointing higher before the open. With no major economic reports on tap today, and earnings season a distant memory, the usual end-of-year volume dip is to be expected.


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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