The Indices to Watch Report for the week beginning July 17, 2023, has been released. Robert Knight, MBA, Turbo Trading's Head Trader, discusses $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 July 17, 2023
$SPX - The index is at key support/resistance at 4500 (whole round number). Lateral resistance and top of the rising channel. On the short term, technical analysis may succumb to the fundamentals of earnings released over the next few weeks. If earnings are strong, we should see 4600. Mediocre numbers and markets probably pull back to 4400 and maybe 4300. Regardless, the chart remains bullish (as we have been saying since February). The trend remains up.
$NDX: The index traded up through key resistance on Friday but closed lower on the day. It is at the top of the rising channel and megacaps are showing over-bought on the short term so not surprising. Again, corporate earnings' outlook should be the driver over the next few weeks. The megacaps have made a massive move since January and I don't think there is an end in sight for a few more years yet. I would expect the NDX to make new ATHs by the end of the year or earlier.
$DJIA: The Dow keeps bumping up against 35600 key resistance. The more times it does, the more likely it will break out of the 8 month consolidation pattern. If it does, and trannies confirm the move, then that would be a major Dow theory buy signal. I would expect it occurs before the end of August.
$DJTA: Trannies have broken the neckline of a reverse H&S pattern and through the declining tops line. It traded up against resistance at 16000 and backed off. Next level 16700 and 17000. Support 15280. Chart remains bullish.
$IWM: The broader market ETF finally broke out of a 14 month consolidation pattern trading over $190. The longer the consolidation period the strong the move to the upside (in this case) will be. It has pulled back to test support. The caveat is the up coming earnings season but the technicals are broadcasting favorable reports. The 50 ema has crossed up through the 200 dma (golden cross) and broken the long term declining tops line. It looks like the broader market will finally catch up to the mega caps as we should see a major bull market continue to develop over the next 2 or 3 years for starters.
$FAS: The financial sector still has a lot of work to do. It came up against the 200 dma and got rejected around $69. Support $65 and $60. It did make a large double bottom at $50. With earning season coming up, most are expecting dismal numbers but it is the outlook that will drive the markets. On the short term it could go either way, Overall, though, the sector will improve and catch up with the rest of the bull market.
$LABU: Biotechs continue to languish. They tried to get going but failed a resistance at $7.75. They held support around $5.50. It remains in a year-long consolidation pattern and, at the moment, the chart is neutral at best. Below $5.25 and it probably tests $4. At $7.75 you have lateral resistance and the 200 dma. It really needs to get through $9.50 to show a change in direction for the sector.
$SMH: The semis test the ATH about 2 weeks before I thought they would. But, as you might expect, it reversed and closed lower as profit-taking set in. It probably needs to come back and fill the gap around $154 before taking another stab at ATHs. Overall, the chart is very bullish in a strong rising channel. Look for SMH to break out and continue to make ATHs over the next 2 to 3 years.
$GUSH: The oil stock ETF tried to break out of the consolidation pattern it was in but got rejected at the 200 dma and failed to hold support around $123. Watch for it to hold support around $112 for a swing entry. The commodity remains strong but profit-taking in the markets is weighing heavy on the stocks.
$NUGT: After double topping at $53 the ETF pulled back and found support at $31. It is back over its 200 dma and the 50 ema never did come down to test the 200. But the ETF is mid range at the moment so on the short term could go either. Too tough to call which direction gold (and therefore gold stocks) will go at the moment.
Technical Indicators: Last week the techncial indicators rgistered an overbought signal as we traded to key resistance. The last two days started to resolve that signal. 72.4% of stocks are above their 40 dma showing a strong rise in markets. The McClellan Oscillator has backed off from $170 to 60.68. VIX remains bullish but giving an overbought reading for mega caps. There is no fear in the market. It would be good to see the indicators become more neutral around key support levels to allow markets to take another run at key overhead levels.
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