Contributor Since 2009
David Chojnacki, Market Technician
The market opened to the upside on Friday, as the indices tried to reverse the recent slide to the downside. It was options expiration day, which saw the volume pick-up. The averages hit their highs just before noon and then slid sideways to slightly lower into the close. By the final bell, the major indices held on to small gains with Techs outpacing the other sectors once again. At the close on Friday, the DJIA was up by 65 points, the S&P added 0.6%, and the NDX gained 1.1%. Breadth was decidedly positive, 4 to 1, on above average volume(Options Exp.). RSI's moved higher, with all there major indices in the mid to upper 40's. MACD's remain below signal, indicating the near term technical weakness. ROC(10)'s were mixed, with the NDX the only index in positive territory, indicating the recent strength in the Tech sector. The ARMS index finished at a bearish 1.39. For the week, the DJIA was down 0.1%, the S&P added 0.2%, and the NDX gained 0.8%. The VIX was up 1% for the week.
Longer term, the major averages have attempted to regain their longer term upside trend, but remain below some key levels. The NDX is below its 50wk. moving average of 4418. On a weekly 5 yr. chart, the NDX has developed a Head and Shoulders pattern, which may be portending a major reversal to the downside. The SPX tested its 50wk. average of 2025 last week, but closed above. Short term the bullish bias holds, as the SPX 50% retrace is at 1965, and the NDX is at 4256. Near term the bias continues to the downside. The SPX has developed a Head and Shoulders pattern with 2033 the neckline. The SPX needs to get above the 2081 level to reverse near term bias to the upside. Europe is lower in early trade. US Futures are pointing lower before the bell.
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