Technical analyst Dave Chojnacki of Street One Financial kicks off the new trading week with a recap of Friday’s bullish action and updates the key technical indicators to watch for the major U.S. averages as we inch closer to the end of 2017.
A good Employment Report helped equities get off to a good start on Friday. This time, most sectors across the board benefitted. Techs continued to recover from their nearly 3% pullback. While the Nasdaq 100 (NDX) is still below its recent record highs, but continuing to make progress.
The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) closed at new highs on Friday, but were unable to bust through their prior intraday highs. With Tax Reform progressing, we expect the rally to continue.
At the close, the DJIA gained 0.49%, the SPX moved up 0.55%, and the NDX added 0.45%. Breadth was positive, on below average volume. RSI’s were slightly higher, with the DJIA leading at 74.1 and the SPX at 71.6. The NDX finished at 56.1. The ARMS Index ended at 0.52, a bullish reading.
Once again, the DJIA and SPX made new record highs last week. The NDX began to recover its earlier losses, on the backs of the Big Tech stocks. For the week: DJIA added 0.4%, the SPX gained 0.3%, the NDX inched up 7 points. We get the FOMC announcement on Wednesday this week, with the Fed expected to raise rates by a quarter of a point.
Long term, the upside bias continues. The DJIA and SPX made new record highs for the second week in a row. The NDX continued to lag somewhat, but began recovering from its recent losses.
This week we look at the 50 week moving average: DJIA-21559, SPX-2433, NDX-5709. Point and Figure charting projects a move of the SPX to 2750.
Short term, the major averages continue their rally. The major indices are comfortably above 6 month lows. Near term, the DJIA and SPX are moving back into overbought territory, as their strength continues. The NDX moved back above its 20D-SMA of 6331, increasing near term strength.
Critical near term support is as follows: DJIA-23242, SPX-2557, NDX-6227.
Europe is mixed in early trade Monday, while US Futures are pointing higher in the premarket. The only major economic report on tap today is the JOLTS jobs openings at 10:00am.
The SPDR Dow Jones Industrial Average (SI:SPDR) rose $0.38 (+0.16%) in premarket trading Monday. Year-to-date, DIA has gained 25.19%, versus a 19.88% 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 #3 of 80 ETFs in the Large Cap Value ETFs category.