Indices to Watch Sampler January 3rd, 2022
It's the first trading day of 2022, and what do the indices show? Find out Robert Knight's expert opinion on what will happen with the stock markets on Monday, January 3? Enjoy 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 3rd, 2022
SPX: A strong year-end rally took the index around 6% to trade to new ATH. The last 4 days of the year were quiet, though, as the index pulled back from lack of volume. Overall, the chart remains bullish. It appears that a strong economy may supersede Fed tapering as we should see strong markets until the end of February at least. After that, we will have to re-assess to see where markets will take us.
NDX: The index made a double bottom in December and had a strong rally into the year-end. It did not make a new ATH like SPX though. It backed off below 1st support around 16450. Next support $16200 and 16000. I would look for the NDX to hold support and rally into the new year to 17000 and 17400.
DJIA: The Dow made a nominal new high at year-end and holding support at 36325 area. 36000 is key support. Look for a strong market in January and February to take the Dow to 37000 and 37500.
DJTA: The Trannies made a double bottom at 15400 area in December. They rallied up to the neck line at 16600. It stalled there at the year-end. The index needs to get through that key level. If so, then I think the move continues as Trannies trade to 17000 and 17500 in January and February.
IWM: The small-cap ETF did hold key support at the 9 month consolidation line. It may have made a V bottom right-hand extension of that support level. It needs to get through $226 to confirm the move. It has resistance at $230 and $235. Chart is neutral and could go either way. But overall I think we will have strong markets in 2022 and IWM will provide us with lots of great trading opportunities.
FAS: The ETF is in a down-trending channel after topping out around $151. But on December 20 it made an island reversal pattern (bullish) and traded back to the declining tops line. Higher interests are bullish for financials. A move through $135 would be very bullish. Look for it to trade to $145 and $150 for starters if it goes.
LABU: Biotechs have been in an 11 month decline and look to be washed out at this level. It is in a trading range between $32 and $42. After test resistance last week the ETF has sold off sharply. We may see it test $33 again. Failure there would be very negative for biotechs. Over $42 and we could see the ETF trade back to $48 and $51. But the chart remains bearish at the moment.
SMH: The semiconductor ETF made a double top and backed off the last 4 days of the year. It is in a basing pattern here with a range of $290 and $318. It has support on the 20 day moving average around $306 then $300. With a worldwide chip shortage look for this ETF to continue to trade higher in the new year. The measured move should take it to $260.
GUSH: The oil E&P ETF remains bearish even though the commodity price remains strong. It is coming into the apex of a wedge pattern. Below $79 would be bearish. It needs to get back through $95 to show a change in direction. For now, we are avoiding oil stocks.
NUGT: Gold bullion remains very strong over $1800/oz. The ETF double bottomed at $41. The last sell-off looks like a capitulation with a big reversal after the spike down. It needs to get through $53 to show a change in direction. $60 and $65 targets.
Technical Indicators: The McClellan Oscillator was exte4rmely oversold at the end of November and we said watch for a rally coming into the year. The Oscillator then double topped last week at an over bought reading of 160. It closed at 98. Stocks above their 40 day moving average closed at 42.73% on Friday. So we may see some more consolidation over the next few days. But there is lots of energy available to take markets higher. The recent over bought that was registered may have resolved itself and we could see markets trade back to new highs early in the month. VIX remains bullish at 17.22.
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