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Indices to Watch July 19, 2021
SPY: Big engulfing bear bar on Friday as markets sold off. The SPY traded down to the 20 day moving average with some support around 4300. Bigger support at 4250 (lateral, rising channel and 50 day m.a.). The SPY does remain in a strong rising channel and no key areas have been violated. But there is a lot of negative divergence in the market right now with very little breadth. If SPY continues to trade higher, eventually the other stocks should catch up. The start of earning's season is upon us so we will see how that plays out.
NDX: The NDX has been in a strong rising channel rising 2000 points rising 15.4% since May 2021. It has pulled back for 3 days now. Key support for it at 14600then 14100. It is mid channel in the longer term. It may find support here on the 20 day m.a. Again, negative divergence from the broader market and the NDX/SPY.
DOW: The Dow made a nominal new high on Friday but made a huge engulfing bearish bar. It may find support on the 20 day m.a. around 34610. Below that and 34500 34300 are support. It remains in both an intermediate and longer term rising channel. The chart has not violated any key points remains very bullish.
DJ - Transportation: The Trannies have turned bearish with the 20 day m.a. crossing down through the 50. It is in a down trending channel now and approaching key support at 14330. Below that 13880 is the next stop. The trannies hare in a significant negative divergence to the SPY and DOW. Look for the Trannies to continue to drag markets lower.
IWM: After making a triple top, the IWM rolled over and is down 8 of the last 10 days. It has broken down through lateral support at $1218 and through a rising channel line. Next support is $212 and $208. It does remain in a large consolidation pattern with a range between $208 and $235. It would not be good for markets if the IWM breaks below $208.
FAS: The financial sector ETF really is coming into the apex of a wedge pattern. But the pattern is bearish. Support $103 and then $96.50. Needs to get over $113 to perhaps signal a change in direction.
LABU: The biotech ETF failed at key resistance around $85. It has sold off sharply down to support at $56.70 area. The chart is bearish. If the ETF fails at $56, look for a move to $50 and $40. It is in a down trending channel now.
SMH: The semiconductor ETF, after making a nominal new high on Wednesday, has sold off sharply the last 3 days closing at $246.69. $246 is support. Below that and $240 and $234 are targets. It is in a large consolidation pattern for the last 7 months. $220 is the key level for it.
GUSH: Surprisingly, the oil ETF is getting hammered dropping over 30% in the last 2 weeks as the price of oil stays strong trading over $70/bbl. Key support for it at $69.70 and $62. Chart has turned bearish.
Technical Indicators: There is no breadth to this market. It is only being held up by FAANG stocks and other mega caps. Only 29.16% of stocks are above their 40 day moving average. The McClellan Oscillator is approaching over sold at 129. Bias is to the down side but we may expect a bounce as markets are over sold. We still may get a surge to the down side where would get an extremely over sold reading. The divergence is that VIX remains bullish trading under 20. But this volatility index is heavily influenced by the strong SPY stocks.
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