Indices to Watch February 26, 2024

SPX: The index traded to new all-time highs through our 5000 target from last November. The index remains in a strong rising channel but is at the top of the channel. Look for a pullback to 5000/4950 area over the next few weeks. But, the economy is just at the start of a new technological revolution, much like the invention of the internet. All of those naysayers' predictions of recession for the last 2 years will continue to be left behind. The economy is strong even with current interest rates. Look for these markets to continue to trend higher for at least the next 2 to 3 years. The bull market is only 1 year old.

NDX: The index traded up to our 18000 target from posts in November last year. It is in wave 3 of a major 5 wave move to the upside. Support 17650 and 17000. Next move up should take the index to 21000, most likely by the end of the year. The mega-caps are leading the charge and will continue to do so. New technology will continue to spur the economy to new heights.

DJIA: The Dow, after breaking out over the ATH at the end of the year is now in a strong rising channel. It traded to new ATH on Friday. Support now 38500. 41000 is still our target, probably by the end of May. The economy remains very strong and resilient. The technological revolution will offset higher rates and the chart (and economy) are very bullish.

DJTA: The transportation index is still lagging the other major indices. It has key resistance levels at 16175, 16700 and 17100. A break over 17100 would be a Dow theory confirmation buy signal. For now, though, the chart remains neutral.

IWM: The Russell 2000 ETF has traded back through the key resistance area of $199, breaking out of the 2-year consolidation pattern. A recent double top at $205 will provide resistance and then $210. But a range break out after a 2-year period is very bullish. Expect IWM to continue to trade higher back to $220 and $240 over the next year as the broader market catches up to the major indices. Chart is very bullish.

FAS: The financial sector ETF is in a strong rising channel and broke out over key resistance at $92. The chart is very bullish, with next levels at $105 and $115. Historically, higher interest rates mean strong earnings for financials. Throw in strong markets and it doesn't look like it is any different this time.

LABU: The biotech sector ETF continues to form a bull flag, finding support on the 200 dma. It is at resistance around $142 and perhaps needs one more pullback before pushing through to $157 and $170 (cup and handle pattern). After languishing for the last couple of years, it looks like biotechs will have their day in the sun. Chart is bullish.

SMH: The semiconductor ETF traded up to our $210 target from $165 entry level back in November. It is in a very strong rising channel but at the top of the channel so may pull back to test support around $200. But with the technological revolution underway look for SMH to trade to $240 for starters. Over that targets are sky, moon and then stars. The chart is very bullish and will continue to be so for at least the next 2 or 3 years.

GUSH: The oil stock ETF may have formed a minor reverse H&S pattern over the last 2 months. It is up against key resistance at the 200 dma around $33.50. Over that, the next levels are $35 and then $37. It needs to get above $37 to indicate a change of direction and perhaps a new bull trend. There are two opposing forces, a strong economy (bullish for oil) but lots of supply (bearish for oil). For now, supply is winning out and the chart remains bearish.

NUGT: The gold miners remain under a lot of pressure even though gold is over $2000/oz. It keeps testing support at $24 (and the more times it tests it, the more likely it goes through it). Most likely, NUGT tests the $22 level. Chart remains bearish.

Technical Indicators: 49% of stocks are above their 40 dma and the McClellan Oscillator sits at 21.66. The broader market is at a neutral level, neither overbought nor oversold. VIX is very bullish at 13.75 with no fear in the mega-caps. With the major indices at ATHs and the broader market breaking out of a 2-year consolidation pattern with neutral indicators is very bullish for markets. There is lots of energy for these markets to continue to trade higher from here. (edited)