The Indices to Watch Report by Turbo Trading Corp. has been released for the week starting October 2, 2023. Robert Knight offers his analysis of the major stock indices for $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 October 2, 2023
SPX: There are 2 conflicting patterns with SPX. First, a bullish 5 wave move up in wave 1 with a 3 wave corrective in wave 2 over the last 2 months. It has bounced off the bottom of the declining channel and lateral support at 4250. Would need to get through at least 4500 for a wave 3 of a 5-wave pattern to be confirmed. The conflicting pattern is a bearish topping pattern forming a H&S with a break of the neckline at 4350. If SPX fails here at 4350 then it probably comes back down to test the 200 dma around 4200. The 1st 2 weeks of October should determine the direction going into the end of the year. Do we get a "Santa Claus" rally?
NDX: Much the same chart pattern as SPX. But, unlike SPX, it held the neckline of a H&S pattern at 14600. 15000 resistance now. A break below 14600 would be bearish for markets with a possible move down to the 200 dma around 13600.
DJIA: The Dow was looking bullish breaking out of a reverse H&S pattern. It traded to 36000 resistance and came back to test the breakout level of 34300. But it failed and now has traded down through the 200 dma. Support now 33200 and then 32600. Chart is neutral at best.
DJTA: The transportation index after testing key resistance around 16700 has pulled back 12%. Support at 14700. It has bounced back above the 200 dma but it needs to hold 14700 area otherwise the chart turns bearish. It could trade down to 14000 and 13300.
IWM: The ETF for the Russell 2000 remains in a 16 month consolidation pattern between $160 and $200. It has traded down below its 200 dma and the 20 ema has crossed down through the 200. The 50 ema is not that far away. It has resistance at $180 now and the 200 dma at $193. Chart remains neutral. Below $160 would be extremely bearish. By the same token, a break out over $200 would be extremely bullish for the broader markets.
FAS: The financial sector ETF failed around $70 at the major declining tops line and 200 dma. Support now $57.25 and $52.50. It needs to get over $75 to really show a change in director for the sector. For now, the chart is neutral at best.
LABU: The biotech ETF broke down out of a 15-month consolidation pattern (extremely bearish) in a 5-wave move to the downside. It has bounced back to test the $4 key resistance level. It could trade back up to $4.40 area (top of the channel before coming back to test the ATL. Most likely, they reverse split the ETF 1:5 or maybe even 1:10. Chart is bearish.
SMH: The semis broke down through the neckline of a 4-month H&S pattern (bearish). It has bounced back up through the neckline and is mid-channel of a down-trending channel. I wouldn't be surprised to see it come back to fill the gap around $135 (also the 200 dma for support). Below $135 would signal the start of a bear market. A break over the multi-year double top at $161 would be very bullish for markets and the continuation of the current bull market for the next 3-5 years.
GUSH: Oil remains strong but the oil stock ETF could be forming a H&S pattern. $40.50 resistance and $36.75 key support. On the short term, high oil prices boosts earnings for oil stocks but eventually is bad for the economy. If GUSH breaks below $36.75 the forward-looking nature of stocks would confirm the negative impact on the economy. Below support next levels are $35 and the 200 dma around $33.75. For now, the chart remains bullish.
NUGT: The strength of the USD weighs heavy on the price of gold. As such, the ETF break down below the 4th wave bear flag and traded down in wave 5 to support around $26.35. Resistance at $28.75. It looks like it will test $24 and maybe $22. Chart is bearish.
Technical Indicators: The McClellan Oscillator after reading oversold at -167 two weeks ago bounced to 50 but sold off to -42.4. Only 24.23% of stocks are above their 40 dma. The VIX did pop to the key level at 20 but now sits at 17.5. So still no fear in the mega caps but the broader market remains very weak. Markets are no longer oversold so it has energy to go either way to test key resistance and support levels.
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