What does Robert Knight believe the Indices show about the markets on Monday, September 20, 2021? TurboTrading's Head Trader offers his insight in this sampler. Note: Paying members get this report and much more. Get a free TurboTrading 1-Week Trial, or become a paid TurboTrading Member to get the full Stocks to Watch List 5x a week. Here's the free sample:
SPX: The S&P index has sold off 2.4% from the ATH in early September. It is in a down trending channel and on support at the 50 day m.a. and the rising channel line. The 50 is strong support (so far) for the index as the last 4 times it touched down it rebounded with a strong rally to new ATHs. The sell off the last 4 times has a 30 day pattern touching down around the 21st of the month. So, Monday should be a critical day. What is different this time is that the Dow Industrials and the Dow Transportation are breaking down. As such we have a strong negative divergence. It is too early to call a change in direction to the bull market but it is precarious at best at the moment.
NDX: The NDX remains in a strong rising channel but has pulled back to the rising channel line. It has also pulled back 2.6% from the highs. It has key support around 15185 (lateral support and the 50 day m.a.). Again it is too early to tell if it is a change in direction.
DOW: The Dow has broken down out of the intermediate channel and is on support at the long term channel line. Both the 20 day and 50 day m.a. have turned down and the 20 looks like it will cross the 50. It has sold off 3.1% from its highs. Dow under 34500 and I would look for a sell off to 34000 and 33500. Chart remains bullish, but just.
DJ-Transportation: The Trannies have already rolled over and turned bearish. The index is in a down trending channel and on critical support at 14240 area. The 20 moved up to the 50 day m.a. but rolled over and both are trending down now. The Trannies are off 11.9% from the highs. This is a very negative divergence. If the Trannies fail to hold 14240 next support is around 13900 and then 13500 at the bottom of the channel. Again, we are at a critical juncture for markets.
IWM: The Russell 2000 ETF remains in a huge consolidation pattern. It is mid range between support ($218, $211 and $208) and resistance ($226, $230 and $234.50). As such the chart is neutral and continues to make it difficult to trade. As it has been for the last 7 months, for many stocks there is no follow through to moves.
FAS: The financial sector ETF triple topped at around $130. It is now hemmed in by a declining tops line. Support around $113 and then $103. For now, the ETF remains bullish. But a break below $113 may change the story.
LABU: The Biotech ETF has broken out of a long term declining channel. It may be starting the 3rd wave of a 5 wave move to the upside. The 20 day m.a. has moved up to and crossed the 50. It this the start of the 3rd wave look for a move to $85. But if overall market sentiment turns bearish, this move by LABU may be muted.
SMH: The semiconductor ETF remains in a strong rising channel and is bull flagging. Key support at $267 and $263 areas. Below those levels would be very negative for markets. The SMH is mid channel and could go either way. It may not be able to with stand the pressure if other indices sell off.
GUSH: BofA is calling for $100 oil. The commodity remains very strong at $70+. As such, the ETF for the E&P producers has broken out of a down trending channel. It has formed a new rising channel. The 20 day m.a. is about to cross the 50. Last time oil was at $70, the ETF was over $100. But you need both a strong commodity price and a strong market for this sector to go. For now, the chart is bullish. Look for a move to $90 and $100.
NUGT: The senior gold miners' ETF continues to sell off and remains in a very bearish trend. We continue to avoid this sector.
Technical indicators: As it was for the past 7 months, we still do not have broad participation in the markets. Less than 40% of stocks are above their 40 day moving average and the McClellan Oscillator is at -50.72. VIX has also poked its head up through 20 (bearish). BIAS is to the downside for markets on the short term. But markets are neither over bought nor over sold. So, there will be little support, from a technical point of view, if the indices break down next week. Be careful and respect your stops.
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