The Silicon Valley Bank failure is a "Black Swan" event that will have significant effects on the stock markets. The Indices to Watch Sampler report for March 13, 2023 by Robert Knight, Head Trader at Turbo Trading, has been issued. This report discusses these major stock indices: $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 March 13, 2022
SPX: The Black Swan event last week with the closing of Silicon Valley Bank has far-reaching ramifications. Not only is devastating for employees but also having a direct effect on large sectors of the economy that count on their lines of credit with the bank to maintain their operations. If the market does not bounce on Monday then the bullish chart that was developing will be negated and it may take months to rebuild. Next key support around 3800 and then 3700. Sharp sell-off, though, will bring tremendous opportunities for investors/traders to acquire strong companies.
NDX: Megacaps may not be as exposed to SVB as some sectors and as such the sell-off may not be as severe. It did trade back down through the 200 dma. Next support around 11500. Value investors may start to put in bids to acquire a sell-off. The next few days will tell the tale.
DJIA: The index broke out of its trading range to the downside and down through the 200 dma. Support at 32000 was also violated. 31500 and 31000 next support levels. Market participants may stand on the sidelines to see where this market shakes out.
DJTA: Trannies traded down to their 200 dma and rising channel line. Failure around 14000 would be negative for markets. Below that and 13400 area is next support. We'll see if it holds. Failure here may take months to rebuild momentum to the upside.
IWM: The broader market was crushed on the SVB sell-off. Many small-cap stocks rely on SVB for their day-to-day operations and closure could be far-reaching, especially for the tech sector. We may have seen capitulation volume on Friday so perhaps a (dead cat?) bounce will ensue on Monday. Sharp sells off bring opportunity but be careful. We don't know how "cheap" cheap is.
FAS: The financial sector ETF was crushed the last 4 days dropping over 30% from its recent highs. The chart had turned bullish but all gains now negated with the SVB closure. Support $57 and $52. Maybe it tests the December low of $50. But, there were some dip buyers showing up on Friday as we saw some of the big names rebound from their lows. Again Monday will tell the tale.
LABU: Biotechs violated support at $6 and $5 like a hot knife through hash. Next level is the June lows around $4. Start-ups and cash burners will need to find new sources of funding and as such the sector is getting crushed. But, again, huge volume to the downside. A bounce on Monday could indicate a capitulation as participants get out at any cost.
SMH: Semiconductors held up relatively well in the market sell-off. It is consolidating in a range between $230 and $250. A further market washout and it is unlikely semis can fight the market trend. But, the chart remains bullish in a strong rising channel. Below $230 and it trades to the 200 dma around $218.
GUSH: The oil stock ETF traded back down to support at $125 (triple bottom). But the more times it tests that level the more likely it fails. Next support $108. Chart is bearish.
NUGT: Bullion surged as a typical hedge against uncertainty. But it didn't really translate into a move for the ETF. Throw the bay out with the bath water it appears. It did double bottom around $29 so perhaps we have seen the lows. Resistance at $34 and $38.
Technical Indicators: Markets are flashing extremely oversold with only 20.5% of stocks above their 40 dma and the McClellan Oscillator at -203.21. VIX spiked to 30 (extremely oversold) and sits at 24.80. I would expect markets to bounce in here.
Did You Know? TurboTrading Day Trade Members get the full Stocks to Watch list, daily webinar with live trades, our library of 500 educational trading videos, expert commentary, swing trade alerts, ten chat rooms, and more. We also have a membership plan for Swing Traders. Start with a free 1-week trial.