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Indices to Watch October 25th, 2021
SPX: The index made a reverse head and shoulders pattern on the daily and was up 7 days in a row. On Friday it stalled after making a nominal new high and closed down .11%. There was late day profit taking. But the market did close right on the previous all time high support (4545). It may back and fill as it digests the big move. But there is lot of internal energy to drive market higher from here without pause. 4600 and 4700 are targets prior top year end.
NDX: The tech stocks are not as strong as the other major indices. It did reverse on Friday down .87% on a sell off of a couple of the big names. It is on support at the 15,355 level. Under that level and the pull back could go to 15,000. With some more big name earnings coming out this week, it should give us better direction for the NDX. I am still bullish for markets to go much higher.
DOW: The index traded to new ATHs on Friday and closed at new highs. This move by the DOW takes it out of a 4 month consolidation pattern moving off a triple bottom at 33676 area. Look for DOW to trade to 36000 and 37000 before year end.
DJ-Transportation: The DJTA double bottomed around 14,000 and has surged off that level. It is up 6 of the last 7 days. ATH comes in around 16000. Through that level would be a major Dow Theory buy signal confirming new ATH by the DOW and SPX. It has moved very quickly to the upside so may need to back and fill before it breaks out to new highs. If it does continue look for 17000 and 18000 as targets.
IWM: IWM continues to consolidate (9 months now). The larger the base the bigger the space. If it can finally break out of this range to the upside it should make for a very powerful up trending market. Resistance at $230 and then $234.50. Support $225 and $1218.
FAS: The financial sector ETF is leading the market higher trading to new ATH. This could be the start of wave 3 of a giant 5 wave move to the upside. It is up 6 of the last 7 days so may need to pause and digest the move. But look for the strong trend to continue as markets the main indices continue to trade to ATHs. $160 and $170 are targets before year end.
LABU: The biotech ETF remains bearish. It is in a strong down trending channel and now bear flagging. Support $48 and $41. For now, I am avoiding the sector except for special situations that may arise.
SMH: The se3miconductor ETF triple bottomed at $250 and held support. It is now mid range. The 20 day m.a. is crossing the 50 (bullish). Key resistance at $274 and $276.50. I would expect this ETF to trade to new ATHs before year end.
GUSH: The E&P oil stocks after trading to 52 week high is flagging between $106 and $115. Oil remains very strong over $80/bbl. It may continue to flag in here until we see the IWM or oil move higher. $135 and $150 targets before year end.
NUGT: Gold bullion has strengthened back to the $1800 level. The gold miner ETF has broken out of a long term declining channel and on Friday traded up through key resistance. I will watching Monday to see what bullion does but most likely will add NUGT as a swing trade. $62 and $65 targets if gold continues to firm. With the strength of inflation, I wouldn't be surprised to see gold continue higher from here.
Technical Indicators: The McClellan Oscillator is at 84.91. Stocks above their 40 day m.a. is at 60.82%. The VIX is very bullish at 15.43. The indicators are definitely showing a strong bias to the upside. But we are neither over bought nor oversold. There is a lot of energy available to drive markets higher.
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