Which stocks should you be watching when the markets open on May 3, 2021? TurboTrading's Robert Knight shares his ideas in his "Stocks to Watch" article the night before each NYSE trading day. Interested in the full report? Take a free TurboTrading 1-Week Trial to get a taste, or become a paid TurboTrading Member to get the Stocks to Watch List. Keep reading for the free sample:
May 3, 2021
SPY: The SPY is looking tired. On Thursday it formed a hammer candle and on Friday it was a gravestone candle. Both are a topping pattern. There are very good earnings coming out and, albeit, the markets are trading at all time highs. But there is a lot of selling pressure in the market as participants "sell the news". Perhaps the markets need to consolidate in here some more. The index does remain in a strong rising channel and is trading at all time highs. The next week or so should give us a better indication on the direction of the market.
DX: The NDX has made a double top over the last three weeks at all time highs. The neck line is around 13700 (key support). It failed to hold support at 13880 level. If this is the top of the market then could trade down to the bottom of the channel at the 13000 area. But over 14100 and we should see markets continue in there strong up trend. Markets are at a critical juncture here.
DOW: The DOW, after trading to ATHs is now forming a descending triangle pattern. Support around 33690 and 32900 area. Again, the next two weeks should show if the market has resilience or rolls over and goes lower. It does remain in a strong rising channel.
DJ-Transportation: This index remains very strong trading to new ATHs on Thursday. It did pull back on Friday but it has up 26% since the February lows. The Trannies are indicating the major world economies have underlying strength. It is hard to imagine that markets would sell off dramatically with the Transportation index so strong. But a negative divergence will need to resolve one way or the other. Key support 15000 and 14750. The index does remain in a strong rising channel.
IWM: The IWM remains in a large consolidation pattern. It failed on Thursday to get through a key resistance level at $230 and sold off on Friday. Key support at $220 and $218. A break below $208 and there would be a major change in the direction of the markets. For now the ETF remains neutral and could go either way.
FAS: The FAS traded to new ATH on Thursday. It did back off on Friday with the rest of the markets. The ETF bounced off the rising channel line and 20 day m.a. It remains in a strong rising channel. It looks like the financials want to lead the markets higher. Key support around $100 and $90. If the rest of the markets sell off it is unlikely to be able to withstand the selling pressure. But as it sits now, the chart is very bullish.
LABU: The biotech ETF triple bottomed around $62 and broke out of a declining channel. Support is around $78 and $76. Failure at those levels and it probably go back to test $62. The ETF is up against the 50 day m.a. and lateral resistance at $86. Through that level and we should see it trade to $100. As it sits now, the chart is neutral and could go either way.
SMH: After making a double top February/April the semiconductor ETF continues to make lower highs. It traded below support at $247 on Friday. Next support $240. It does remain in a strong rising channel but is approaching the rising bottom channel line. A break to the down side of that channel would be negative. Technically, it is forming a bear wedge here. The next week should give us clear direction on the sector.
GUSH: Oil remains strong trading over $63/bbl. The GUSH had broken out of a declining channel and it look liked the strong oil price was going to propel oil stocks higher. But the ETF succumbed to the pressures of the over all market and sold off. It needs to hold support at $62. $78 and $84 targets.
NUGT: After breaking out of a major declining channel pattern the ETF rallied to key resistance at $70 area. It failed there and rolled over sharply as the bullion price softened. Key support now at $59. Below that and it would be a break down for the sector and perhaps a new bearish trend.
Technical Indicators: 55% of stocks are above their 40 day m.a. and the McClellan Oscillator sits at -14.12. There is still no broad participation in the market as small and mid cap stocks languish. Stocks have no follow through with many charts trading in a sideways consolidation pattern. VIX does remain under $20 which is bullish. But it looks like it will get back over 20 (neutral). Markets are neither over bought nor oversold but bias is to the downside now.
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