Indices to Watch February 12, 2024

MyCompass Trading's Indices to Watch Report for February 12, 2024 has been released. The indices are $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 1-Week Trial, to receive the Stocks to Watch List.

Stocks to Watch February 12, 2024

SPX: The index broke through the psychological barrier of 5000 trading to 5030, a new ATH for the index. There seems to be little concern for inverted treasury yields, talk of real estate collapse and a pause in rate reduction talk (among many other indicators bears are pointing to keep forecasting a recession). The bears are so wrong this time. The SPX is up nearly 50% since the October 2022 low and it continues to power higher. Why are the bears so wrong this time? It is true that there is not much breadth to this market yet. A large percentage of the move can be attributed to the mega-caps. But I think the broader market is about to start to catch up. So, what is driving the move? I think it is a technological revolution driven by AI. To me, it looks like the SPX is in wave 3 of 5 wave move to the upside. I would say there is a few more years left in this move as the bull market is well underway.

NDX: There is no stopping the mega-caps. The NDX is in wave 3 of a 5 wave move to the upside, trading to new ATHs daily it seems. Our target is still 21000 for the index, most likely this year.

DJIA: At the end of 2023 the Dow broke out and then consolidating, holding support at 37000. Then, mid-January it started its march higher support by good earnings from its components. Look for Dow to trade to 41000 for starters. It is wave 3 of a 5 wave move to the upside. The bulls are in control.

DJTA: The transportation index is lagging. But of late many stocks in the sector are showing strength. On Friday the index closed above key resistance at 16100 area. Next levels $16700 and then 17100. Over 17100 would be a Dow theorists dream as it would confirm the new ATHs by SPX and DJIA.

IWM: The ETF for the Russell 2000 is right up against a key breakout level at $200. A solid surge through that level and $210 would be a massive 2 year range break out (very bullish). With the mega-caps so strong and the start of a technological revolution, I think this is just the start for the mid-cap and small-cap markets. I would expect the IWM to test $235 and $250 this year.

FAS: The financial sector ETF is up against key resistance at $92. I think it just a matter of (short) time before it makes the next move up over $92 with a move to the $105 area. Regional banks are under pressure but the big names had strong earnings and should continue higher from here. We'll be watching the regionals banks (DPST, KRE) for a set up to put on a swing trade soon.

LABU: The biotech ETF broke out to the upside from a bull flag trading to resistance at $125, The 50 day ema has crossed up through the 200 dma (golden cross). With the broader market showing some strength I would look for a solid biotech market for the next 2 years. Chart is bullish.

SMH: Back in November 2023 we expected the SMH to trade to $210in 2024. After breaking out over $160 it has only take 6 weeks for it to move 25% and now just $6 short of our $210 target. It looks to be in wave 3 of a 5 wave move to the upside. After $210, $240 is the next target. The sector, obviously, is one of the main beneficiaries of the technological revolution we are experiencing.

GUSH: With the economy (and markets) rolling along, you would think oil stocks would benefit from their strength (and throw in some political tension). But there is an abundance of oil in the US, keeping a lid on oil prices and stock prices. The oil stock ETF is hemmed in by a long-term declining tops line and trading in a range now between $28 and $32. Also, there will be resistance at the 200 dma around $33.50. Technically, the chart remains bearish.

NUGT: The gold miner ETF failed to hold support at $26.40 even though bullion prices are stable around $2000/oz. I would look for the ETF to test $24. Chart remains bearish.

Technical Indicators: 45% of stocks are above their 40 dma and the McClellan Oscillator sits at 23.54. Markets are neither overbought nor oversold. There is no fear in the megacaps with VIX remaining very bullish at 12.9. With IWM testing key resistance, there is a lot of energy available for markets to continue higher. Look for IWM to break out over the next few weeks and the megacaps continue to surge.