Want to find out what Robert Knight thinks the markets will do on Monday, October 18th? As TurboTrading's Head Trader, Mr. Knight is qualified to offer 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 October 18th, 2021
SPX: The SPX made a sharp reversal, gapping up 2 days in a row moving 145 points in 3 days. It broke through the declining tops line and through the key moving averages. The index has also broken the neckline of a mini reverse head and shoulders pattern. There is lateral resistance at 4487. Through that and would should see the SPX challenge the ATH. It appears that this move is the start of the "Santa Claus" rally and we should see stronger markets now until the end of February.
NDX: Similar to the SPX, the index broke out of a declining channel and up through key moving averages. It has resistance at 15,185 and 15500. The index held the long term rising channel and as such we should see the NDX trading at new ATHs before year end.
DOW: The DOW triple bottomed around 33750 and was forming a wedging pattern. It has surged the last 2 days trading up through key moving averages and lateral resistance. Look for DOW to test ATH over the next month and trade beyond. This move of the index confirmed by the DJ-Transportation is a Dow Theory buy signal showing a change in market direction.
DJ-Transportation: The Trannies broke out of a 4 month consolidation and traded up through key lateral resistance at 15000. The index double bottomed around 14000 and has now broken out of a down trending channel. The 20 day ma.a has crossed the 50. This move by the Trannies is a Dow Theory signal that the trend in markets has changed. Look for Trannies to trade to new ATHs before the end of the year.
IWM: The small and mid cap ETF remains in a 9 month consolidation pattern. It started out strong on Friday but reversed at a declining tops line closing down on the day. These stocks tend to lag markets not lead. So, for now, the IWM remains neutral.
FAS: The Financial ETF traded to new ATHs on Friday as the banking sector is coming out with strong earnings. FAS at ATHs is a strong bullish market indicator. It was in a 5 month consolidation pattern. So the move to the upside is very significant. Look for FAS to continue higher and to drag the rest of the market with it. Targets now for FAS are $155 and $185.
LABU: Of the 3 ETFs I follow, LABU is the weakest and never really recovered. It remains in a down trending channel. Friday was a negative reversal day for the ETF. It needs to 1. hold the $47.50 level and 2. trade up over $65 to show any kind of reversal. For now, I am only trading specific strong biotech charts and avoiding the sector as a whole.
SMH: The semiconductor ETF was quite bearish. But it made a triple bottom at $250 and gapped up 2 days in a row. It is up against key resistance at $264 and $267.50. It may need to back and fill at this level before making the next leg up. Through those key levels and we should see SMH at ATHs before year end.
GUSH: Oil remains very strong over $80/bbl and E&P ETF is back at 52 week highs. It is in a strong up trend. Targets $135 and $150.
NUGT: The senior gold miner has broken out of a long term declining channel and traded up to key resistance at $53. It appears that gold, as an inflation hedge, may becoming back into vogue. It has made a strong move off the bottom of the channel at $40 so may need to back and fill in here. But, I believe the direction has changed for the ETF. Over $53 and I will look to go long.
Technical Indicators: The McClellan Oscillator traded as high as 163 on Friday, flashing short term over bought. It did back off to 83.80 at the close. That is now a more neutral reading. We will want to see that at least hold next week as stocks consolidate their big move. 57% of stocks are now above their 40 day m.a. The VIX is bullish under the key level of 20 (16.3). The indicators show a bias to the upside for markets. But they may need to back and fill in here to digest the strong 3 day surge before moving to new highs.
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