Indices to Watch January 16, 2024

MyCompass Trading's Indices to Watch Report for January 16, 2024 has been released. This will be a short trading week due to the MLK holiday. 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.

SPX: The index traded just 15 points short of ATH after trading in a narrow range most of the day. PPI numbers came out showing inflation continuing to ease. But the news was offset by bank earnings that were neutral at best. It is trading at a multi-year double top so it won't be surprising if profit-taking sets in. We are at the onset of earnings, which we will see if they agree with the index at ATHs. Next few weeks should be interesting. Solid earnings numbers should take the index this year to 5400. If not, support 4700 and 4600.

NDX: The index broke out to new ATHs at the end of December but pulled back to hold key support. Thursday and Friday tested ATHs again trading over the 2021 ATH and holding support there (16765). If it breaks out over the December high, it should be the 5th wave inside wave 3 of a major 5-wave move. The major 5-wave move should take it to 21000 area. Guidance through earning season is the caveat here.

DJIA: After breaking out over 37000 the Dow is forming a bull flag as it consolidates the move. Look for Dow to trade to 43000 this year as the bull market continues on for the next few years.

DJTA: The transportation index could be the fly in the ointment. You need a strong transportation sector to prove the economy is sound. For now, the index is neutral in a 2-year consolidation pattern. It is mid-range at the moment. Support 15200. Resistance 16000 and 17000. To confirm the new ATHs of the SPX and DJIA will hold, the transportation index needs to trade through 17000.

IWM: After breaking out of a 19-month consolidation pattern, the Russell 2000 ETF pulled back under the $200 break-out level. For now, it is holding $192 support. Bigger support at $189. Below those levels would be negative for the markets. It would be a strong negative divergence from the mega-caps. Next few weeks should be crucial to give us a direction.

FAS: Engulfing bearish bar on Friday with the financial sector ETF. The first round of bank earnings were neutral, but guidance remains strong. Key resistance for FAS at $84. Support $79. The chart is bullish but continues to consolidate in here. A move over $92.50 would be a major breakout for the ETF.

LABU: After breaking out through the long-term declining tops line the biotech ETF is in a strong rising channel. The 50 ema is crossing the 200 dma (bullish). The ETF has pulled back but is on the rising channel line. Stronger support around $115.60. Chart is bullish.

SMH: The semiconductor ETF looks to be in wave 5 of the major 3rd wave of a major 5-wave move to the upside. It is mid-channel of the short-term rising channel. Key support $165.65.. Look for the next move to take the ETF to $185 for starters. Look for SMH to trade to $200 and $225 this year.

GUSH: The commodity has strengthened on Middle East tension, but there appears to be an oversupply of oil as Saudis drop their oil price by $2/bbl and the US continues to be a strong net supplier of oil. GUSH remains bearish, with support around $28.65 and $26.70. The 50 ema has crossed down through the 200 dma (bearish ). Resistance $32.50 and $35.

NUGT: Even though bullion remains very strong, the gold miners remain bearish long term. Short term, the chart is neutral as it trades in a range between $30 and $37. A move through $37 could signal a change in direction for the sector. For now, the chart remains bearish.

Technical Indicators: 59% of stocks are above their 40 dma and the McClellan Oscillator sits at -81.96. But VIX is a very bullish 12.7. So, the broader market is neither over-bought nor over-sold. But there is not much energy available to take markets lower with any gusto. I would look for key support levels to hold and as earnings come out for markets to trade higher as the bull market continues.