Turbo Trading's Indices to Watch Report of May 22, 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 May 22, 2023
SPX: The index stuck its head over key resistance at 4200 the last 2 days but closed just below it. Not surprising to see profit taking set in at these levels. But the markets are not overbought nor oversold. Look for SPX to test 4300 in the next 2 months. Chart is bullish.
NDX: Megacaps remain the driver in these markets. NDX traded to new 52-week high breaking through and closing above key resistance (now support) at 13720. It is in a strong rising channel and looks to be in wave 5 of a 5-wave move to the upside. Kook for NDX to test 14275 in the next 2 months. Chart remains very bullish.
DJIA: After double bottoming in October 2022 the Dow surged to key resistance at 34300. It has been consolidating in a range mostly between 32640 and 34300 for the past 7 months. It is mid-range so could go either way on the short term. A base break out over 34300 would be very bullish for markets as the longer it stays in a range the stronger the break out. Chart remains bullish.
DJTA: Trannies continue to wedge. Another couple of weeks should give direction to the index. But it is a negative divergence from the rest of the markets. A major move upwards by the major indices needs to be confirmed by the transportation sector.
IWM: The broader market remains in a year-long consolidation pattern. Of late, it is range bound between $170 and $180. 200 dma sits around $181 (also key resistance). To show a change in direction the ETF needs to get through $190 and $200. By the same token, it needs to hold $170 and $160. Whichever way it moves, after such a long consolidation period, the move should be very powerful. Chart is neutral.
FAS: The financial sector ETF double bottomed around $50. It is now forming a bear flag. Key resistance around $65/$67 and the 200 dma average around $71. But if the overall market continues strong, then banks should return to normality and catch up as earnings improve. Technically, the chart is bearish especially if it breaks below $50.
LABU: The biotech ETF remains in a year-long consolidation pattern. But after double bottoming around $4.25 the ETF is now in a rising channel. It touched the 200 dma a couple of times around $7 but was rejected. Support at $6 (rising channel line, lateral support). It needs to get through $9.50 to really show a change in direction. For now, the chart remains range bound between $6 and $8.25. Chart is neutral at best.
SMH: What a monster! The semi ETF is up 59% from its October low. It broke out of a 4-month consolidation pattern with a strong move to the upside. It looks to be starting wave 3 of a 5-wave move to the upside. I would expect this ETF to trade to $142 in the next 6 weeks. Chart is very bullish. But on the short term, mid-range it is mid-range and could be subject to profit taking. Key support $128 area.
GUSH: The oil E&P ETF continues to hold support around $100. But it does remain in a strong down-trending channel. Key resistance for it is now around $124. Over that level and it could show a change in direction for the sector. On the short term it is mid-range so could go either direction. But overall, the chart remains bearish.
NUGT: The gold miner ETF double topped at $52. Since then it has sold off sharply failing to hold several key support levels. Support now at $38 and $35. It broke the neckline at $43 of a H&S pattern so the ETF has turned bearish.
Technical Indicators: The McClellan Oscillator sits at 1 and 42% of stocks are above their 40 dma. VIX is bullish at 16.81 which is not surprising showing the strength of the megacaps. But the broader market remains neutral and in a consolidation pattern. Markets are neither overbought nor oversold. This fact is key as we are at a strong support/resistance area on SPX (4200). With neutral markets, there is lots of energy available for continuation to the upside.
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