Indices to Watch April 29, 2024

SPX -At the end of March the index made a double top ending wave 3 of a 5 wave move to the upside. The markets have corrected in wave 4 finding support around 4950. The index is back over its 50 ema and 20 ema. Perhaps it consolidates a little longer in here as treasury rates continue to climb and rate cuts are not in the cards for sometime to come (September?). But overall, markets remain bullish and the trend is still up.

NDX: The index also pulls back near the rising channel line and bounces. The NDX double topped in March and pulled back in wave 4. Holding the trend line it needs to get over 17850 to show the start of wave 5. Look for NDX to trade to 21000 in the 5th wave move.

DJIA - The Dow made a massive move after breaking out of a 2 year consolidation pattern (very bullish). It came close to our 41000 target we talked about last November. It bounced off support at 37850. It needs to get through 39150 area to show continuation. Look for it to trade to 41000 and the 44000 before the end of the year. The overall economy remains strong and value stocks (the Dow) are not as rate sensitive as growth stocks and should continue in its bullish trend.

DJTA - The transportation index remains in a 3 year consolidation pattern and is mid range at the moment. Support around 14600 and resistance around 1620. The sector needs lower rates for a move to the upside. For now, it probably continues to trade sideways at least until the fall.

IWM - The broader market ETF continues to trade in a 6 month flag pattern. Support around $190/$192 with resistance at $200 and $210. A break over $210 would be very bullish for markets. We probably won't see that move, though, until the Fall when the Feds are expected to cut rates. Lower inflation and rate cut and we could see an explosive move as it breaks out over $210. Look for $240/$250 area by the end of the year.

FAS - After making a 100% move off its lows in wave 1 we are now pulling back in wave 2. It held key support at $92 and is back over its 50 ema. A move over $105 would be bullish for the sector as it would indicate the start of wave 3. Look for wave 3 to take the ETF to the $125 area. Over that look for $133.

LABU - The biotech sector (growth stocks) are getting hammered with higher rates. The ETF is in a strong won trending channel but finding some support around $81. The 20 ema is crossing down through the 200 dma and the 50 ema is not far behind (bearish). We could see a bounce here to $06 as the ETF is at the bottom of the down trending channel. Below $81 and it is trading down to $69 for starters. The chart is bearish.

SMH - The semiconductor ETF is in wave 4 of a rising 5 wave move. It needs to get over the $220/$225 level to show the start of wave 5. For now, it is under pressure from rising rates (growth stocks nemesis). Over all the chart is very bullish but probably needs to consolidate some more to solidify its massive gains. I think that the technological revolution we are under going will trump fear of higher interest rates. Look for SMH to trade to $250 and $280 for starters this year.

GUSH - The oil E&P stock ETF remains in a 2 year consolidation pattern between $27 and $45. But the world economies are strong and should continue to put upward pressure on prices. On the flip side, though, there is lots of oil available so unless there is a black swan event most likely oil remains in this trading range. A solid move over $45 could see the ETF test $52 and $57. Technically the chart is neutral as it continues to trade in a range.

NUGT - The gold miner ETF broke out through key resistance at the end of March where we put a swing trade on at $34. It popped and then pulled back and held support around $35. As major economies continue to run large budget deficits (print money) expect gold bullion to continue to rise. Next targets $52 and $60. Chart is bullish.

Technical Indicators: The McClellan Oscillator sits at a neutral 4 and 37.5% of stocks are above their 40 dma. VIX, after spiking to 21+ has pulled back to a bullish 15. The fear has gone out of the mega-caps. The broader market is neither over bought nor oversold. There is lots of energy available for the markets to break through key resistance at start wave 5 for a strong move to the upside. I would expect markets to remain bullish for at least the next 2 years.