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Indices to Watch August 21, 2023

Indices to Watch

What should you look for when the stock markets open on August 21, 2023? Turbo Trading's Robert Knight, MBA, talks about these stock indices: $DJIA, $DJTA, $FAS, $GUSH, $IWM, $LABU, $NDX, $NUGT, $SMH, $SPX, and Technical Indicators. Note: Paying members receive this report and much more. Get a free TurboTrading 1-Week Trial, or become a paid TurboTrading Member to receive the Stocks to Watch List. Here's the free sample:

Indices to Watch August 21, 2023

SPX: The index sold off 13% from the July high around 4600 as US sovereign debt rates continued to rise, putting a lot of pressure on growth stocks. The index has sold off to support around 4300 and the technical indicators are reading over sold. The economy remains strong, so I would see this as a correction in the longer-term bull market upward trend. 4400 and 4450 resistance now.

NDX: The NDX sold off around 7.4% from the July highs, coming down to support at 14700 (lateral support and rising channel line). I think the pullback is wave 2 of a 5-wave move to the upside. Much below 14300 would change that storyline. Wave 3 should take the index to new ATHs.

DJIA: After breaking out of an 8-month reverse H&S pattern, the index has pulled back to the neckline breakout level around 34300. Markets are oversold, so look for the index to bounce off this level to test 35000 and 35500. I would expect the Dow to trade to new ATHs by year's end.

DJTA: The Trannies were rejected at 16700 resistance and pulling back to test 15265. The trannies are facing some headwinds with lower economic numbers coming out of China. But a robust U.S. economy should help soften the blow. Chart remains bullish.

IWM: The broader market ETF was rejected at key resistance around $200 and has sold off sharply back to its 200 dma. It is back into the range between $180 and $190. A break below $180 would not be good for markets. Look for the ETF to consolidate in this range for the next few weeks. I think it breaks through $200 before year's end.

FAS: The financial sector ETF failed at the long-term declining tops line, lateral resistance ($74.50) and failed to hold the 200 dma. Support now around $60.85 and $57.50. Normally, higher interest rates are good for banks, but threats of further bank rating down grades has put pressure on the market. It is back into a trading range now. It needs to get through $75 to show a change in direction for the sector.

LABU: The biotech ETF continues to head lower in a 5-wave move from $7.75. It has key support at $4.25. Below that level and it would be very negative for the biotechs. It remains in a 14-month consolidation pattern. A break, one way or the other, should show a strong move. It neds to get through $7.75 to show a change in direction to the upside.

SMH: After making a double top at nominal new ATHs the Semis ETF has pulled back to the long term rising channel line and lateral support at $143. A break below that area could see the gap fill at $134.30. For now, the chart remains bullish but if it fails here, it will be a strong topping pattern in hindsight. I still think we will see SMH at ATHs by year end. We'll see....

GUSH: Oil back over $81, Saudi's maintaining production restrictions and a robust US economy has sent the oil stock ETF on a tear up 65% from its triple bottom to $100. The 50 ema has crossed up through the 200 (golden cross). Chart is in a strong rising channel. Targets $166 and $176.

NUGT: The gold miners continue to break down, failing to hold key support at $29. Look for it to test $27 and $22. The strong USD (caused by high interest rates) is putting a lot of pressure on the price of the commodities. Chart remains bearish.

Technical Indicators: Markets registered an extremely oversold ready in the broader market. Only 32.6% of stocks are above their 40 dma but the McClellan Oscillator traded down to -237.68. Under -200 is extremely oversold. It finished at -141 (oversold reading). Surprising, though, VIX remains complacent at 17.30 (under 20 is bullish). I would expect markets to bounce of key support from this level.

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Indices to Watch

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