Indices to Watch August 28, 2023
What can you look forward to in the stock market on Monday, August 28, 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 28, 2023
SPX: After a 5-month wave 1 to the upside, the index has made a 3-way correction in wave 2. If it holds 4330 and starts to trend higher the index should make wave 3 most likely to 4800 area. You would expect a pullback there (wave 4) with a wave 5 taking the index to new ATHs. I would expect wave 3 to reach the previous all-time high by the end of the year. Failure at 4300 would negate the trend and you would see the index trade down to 4200 break out level.
NDX: The index made a strong 5-wave move up (wave 1) to 16100 area before pulling back (wave 2) to the rising trend line. Key support around 14665. Look for wave 3 to start and take the index to 16800 area (ATHs) by year-end. The chart is in a strong rising channel and remains bullish.
DJIA: After breaking out of an 8-month reverse H&S pattern the index traded up to resistance at 35800 area. It has pulled back to key support at the neckline break out around 34275. It is also on the rising channel line for support. Failure here would take the index down to lateral support and the 200 dma around 33275. Resistance at 35000,35500 and 36000. Chart remains bullish.
DJTA: Trannies also broke out of a reverse H&S pattern and traded up to key resistance at 16700. It has pulled back to the neckline break-out area and is flagging. Support 15225 and around 14800 (200 dma). The index is mid-range so could go either way on the short term. But overall the chart remains bullish and I would look for it to be over 17000 by year end.
IWM: The broader market failed to break out of its 14-month trading range after testing $200 resistance level. It has pulled back to its 200 dma and lateral support around $180. It is mid range of a sideways channel. It needs to get over $200 to show a real change in direction for the markets. But if the mega-caps continue to trade higher in wave 3 of a 5 wave move, then the broader market will get dragged along. Chart remains neutral.
FAS: The financial sector ETF traded to the declining channel line and failed. It traded back under its 200 dma and down to support at around $61. It is making higher lows but needs to get through $75 to show a change in direction for the chart. The chart is neutral at best. A break below $61 look for it to trade down to $57 and $53.
LABU: The biotech ETF is in a down trending channel since being rejected at $7.75 area. It made a triple bottom at $4.25 last week and looks to test that level again. A break below that level would be very bearish. It remains in a 14-month consolidation pattern between $4.25 and $7.75. After such a long consolidation, a break one way or the other will be very powerful.
SMH: The Semis had a huge engulfing bearish bar after the $NVDA earnings but held the rising channel line on Friday. It remains in a large rising channel but has key resistance at ATHs around $160. A break below $143 would be bearish. High interest rates are putting a lot of pressure on growth stocks. Even so, I would expect SMH to be trading to new ATHs by year end. The chart remains bullish.
GUSH: After a break out of a long-term declining channel GUSH double topped around $163. It is now forming a bull flag. The 50 ema has crossed up through the 200 dma (golden cross). A break over $167 and we should see the ETF around $186 and $209. Chart remains bullish.
NUGT: A strong USD and expectations of lower inflation have put a lot of pressure on the gold price. As such, NUGT has failed to hold key support levels and was rejected at $32 resistance. Support $26.65 and $22. Chart is bearish.
Technical Indicators: After registering extremely oversold last week, the technical indicators are back to more neutral. 28.8% of stocks are above their 40 dma and the McClellan Oscillator sits at -75. VIX remains bullish at 15.68 as there still is little fear in the market. With markets oversold at key support, we should see markets reverse and trade higher into the year-end.
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