Our Indices to Watch Report for August 7, 2023, is posted below. Turbo Trading's Robert Knight, MBA, covers $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 7, 2023
SPX: Big engulfing bearish bar (again) on Friday as profit-taking set in ahead of the weekend. After getting rejected at 4600, the index failed to hold the 4500 support level. Next level 4450 and then 4400 (50 ema, large round number and lateral support). The index remains in a strong rising channel and the chart, overall, is bullish.
NDX: The index also sold off into the close settling right on key support around 15275. The index was rejected at the top of the channel and lateral resistance at 16000. Next support level 15000 and 14775. It is in a strong rising channel, but mid-channel now so could go either way on the short term. Over all, the chart remains bullish.
DJIA: The Dow broke out of an 8-month-long reverse H&S pattern in mid-July It traded to lateral resistance around 36000 and was rejected. it failed to hold the 35400 support area. Look for it to pull back to test 34600 key support. Overall, the chart is very bullish.
DJTA: Trannies confirmed the Dow break out trading through key resistance at 16000. The index was rejected at lateral resistance at 16700. Watch to see if it holds 16000 support. A bounce off that level would be very bullish for markets. Failure there and 15300 is the next main support.
IWM: There is strength in the broader market as Russell 2000 ETF broke out of a 13-month consolidation pattern over the $190 area. It traded to resistance at $200 and backed off. It is forming a bull flag with support at $193. Below that and it probably tests the $190 breakout level. Over $200 will be a strong bull signal for markets.
FAS: The financial sector ETF is hemmed in by the long-term declining tops line. It is trading right around its 200 dma as well. Support $67.35 and $65. Eventually, the sector will get pulled along with the rest of the market as, normally, financials lead the charge. But there are a lot of headwinds for the sector with high-interest rates having depositors go to money market funds and stricter banking regulations in place. Watch for the 50 ema to cross the 200 dma to form a golden cross and a swing trade entry level.
LABU: The biotech ETF remains a laggard, range bound for the past 14 months between $5.20 and $7.75. Below $5.20, I imagine, the LABU will test the $4.25 lows. It just can't seem to get going running out of steam every time it gets to key resistance levels at (now) $6, $7 and $7.75. Chart is neutral at best.
SMH: The semiconductor ETF double topped over $160 after making a nominal new high. It has pulled back to support at $152.50. Below that and the 50 ema around $150 should be the next support level. Below that $146 and $143. It is mid-channel of a large rising channel so could go either way in the short term. Overall, the chart remains bullish.
GUSH: The Saudis continue to restrain oil supply and the U.S. has a large drawdown in reserves keeping oil prices firm. Talks of China re-inflating their economy and a strong US economy all bode well for oil prices. GUSH has broken through the long-term declining tops line and the 50 ema looks like it will cross the 200 dma to form a golden cross. Support $137. Next targets $155 and $164.
NUGT: The gold stocks are under a lot of pressure testing key support at $32. The 50 ema is crossing down through the 200 dma average (death cross). Failure at $32 takes the ETF down to $29. Chart is bearish.
Technical Indictors: After being overbought the technical indicators have come back to a more neutral reading. 55% of stocks are above their 40 dma and the McClellan Oscillator sits at -55.56. VIX has bounced of 13 to 17.10 on Friday. VIX below 20 remains bullish as the fear indicator (no fear in the markets). As markets sell off from recent highs towards support the indicators will start flashing oversold. Being oversold at support should mean a bounce for markets and a continuation back to test ATHs. I would expect markets to be trading at new ATHs before year end.
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