How are the markets looking on January 10th, 2022? Turbo Trading's Head Moderator, Robert Knight, covers the major indices in this weekly report. Read this public sample of his "Indices Watchlist." Note: Paying members get this report and much more. Get a free TurboTrading 1-Week Trial, or become a paid TurboTrading Member to get the Stocks to Watch List. Here's the free sample:
Indices to Watch January 10th, 2022
SPX: The volume to the downside remains heavy on the SPX which is negative. After flagging between Christmas and New Year, the index has sold off sharply. Friday looked like it might hold but at the end of the day, it came under renewed pressure. The index did bounce off the 50 day m.a. and remains in a strong long-term rising channel. There remains a lot of cross currents as growth stocks (read FAANG) sell-off but are being replaced by value stocks. There isn't fear in the market, just rotation. Fed tapering (removing liquidity) should be offset by a strong economy (adding liquidity).
NDX: Growth stocks continue to sell off and the contagion is spreading to the FAANG stocks. On Friday the index sold off to key support to 15,500 area and held. It is right on the long-term rising channel line. A break below 15,500 and 15,200 is next support. For now, the chart remains bullish. But it is at a critical level.
DJIA: After making a new ATH last week (just short of our 37000 target), the Dow has backed off to hold support on the 20-day m.a. It double-bottomed around 34,000 and is in a rising channel now. This pullback could be wave 4 of a 5 wave move to the upside. Overall, the Dow is bullish and bounce from this level takes it to 37500 and 38000.
DJTA: After making a double bottom at 15450 area, the Trannies made a V bottom right-hand extension pattern (bullish). It is hemmed in by a declining tops line. Support around 16150. Key resistance at 16600 area. Over that level and look for it to trade to 17000 and higher.
IWM: The Russell 2000 ETF continues to trade in a 1-year range between $208 and $235. The sideways move is a result of sector rotation. Biotechs are a huge drag on the index as are tech stocks. But these sectors are offset by strength in financials and oils to name a few. We need all of the sectors to head in the same direction to give a reading on the market. A break below $208 would be bearish for all sectors. It is a market of stocks, not a stock market.
FAS: The financial sector ETF is has surged $35 in the last 3 weeks just short of ATH. The prospect of higher interest rates is good for banks. The 20-day m.a. average has crossed through the 50. It may pause here at $151 (wave 4) before continuing to new ATH (wave 5). $160 (measured move) and $170 (top of the channel) are targets.
LABU: The biotech index broke down last week trading to new support at $27.50. But the ETF remains in a strong down trending channel and the chart is bearish. As it is at the bottom of the channel it probably bounces from here. I am not expecting much. Look for it to fill the gap at $26 and $21.50. We are avoiding the sector for now.
SMH: Semiconductors were leading the markets higher since 2008. But for the last months, they have been trading in a range between $292 and $319. With a move out of growth stocks, we will see if this ETF can hold the $292 level. Failure there and it probably fills the gap to $283 then $276.65. On the short term, the chart is neutral at best.
GUSH: Last weekend I suggested that GUSH was neutral and we were avoiding the sector for now. In the following 2 days, that story changed as the ETF broke out and surged to resistance at $105. Oil is strong trading around $80/bbl. It looks like the 20 day m.a. will cross up through the 50 (bullish). Looking for a pull back entry to $97 or perhaps over $105. We should see GUSH trade back to 52 week high at $122 and then $135. The gap fill is around $190.
NUGT: The ETF double bottomed at $41 level. Gold remains in a trading range between $17.60 and $18.50. Gold needs to break out of the wedge pattern it is in to give direction for NUGT. For now. it probably trades sideways until gold decides which way it will go. With strong inflation, you would think higher. We will see. For now, we are avoiding the sector.
Technical Indicators: The technical indicators have pulled back from an over bought reading last week. 44.8% stocks are above their 40 day m.a. The McClellan Oscillator has pulled back to 29.39. The markets are neither overbought nor oversold. What is most interesting is that the VIX remains bullish under 20 (18.76). So even though growth stocks are selling off, there is no fear in the market as value stocks are strong. A key indicator that the markets have discounted the Fed tapering and looking forward to a strong economy.
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