Indices to Watch January 22, 2024

MyCompass Trading's Indices to Watch Report for January 22, 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 January 22, 2024

SPX: Markets surge to new ATHs on Friday up 1.23% on the day. It is a multi-year breakout. In early November, we suggested that markets were very strong and look for them to trade to new highs before the end of January. The surge is accentuated by the strength of the mega-caps with the broader market not fully participating. It looks like the start of wave 3 in the third wave of a major 5 wave move to the upside. Chart is very bullish.

NDX; Strong break out on the mega-caps as the NDX trades to new ATHs. It has broken out over a multi-year double top (very bullish). It looks like the index is in the 5th wave move in a larger 3rd wave of a 5 wave pattern. Look for NDX to trade to 21000 by the end of the larger 5th wave move (most likely by this summer). Chart is very bullish.

DJIA: The Dow makes a nominal new ATH on Friday. It is breaking out of a wave 2 consolidation and now the start of wave 3 of a major 5 wave move to the upside. Look for the Dow to trade to 43000 at least by the end of the year. Chart is very bullish.

DJTA: The Transportation index is lagging behind the rest of the markets, which is a negative divergence. You need a strong transportation sector to signal a strong economy. The index is neutral and mid-range between 13500 and 16750. Most likely, the index resolves to the upside and confirms the major moves of the SPX and DJIA. It needs to trade over 17100 though to confirm the other indices.

IWM: The broader market ETF held support at $188 and traded back up through resistance at $192 on Friday. Look for the ETF to break out over $200 as it gets dragged along with the mega-caps. Over $210 is a key break-out level from a 2-year consolidation pattern. I would look for the ETF to trade to $240 this year.

FAS: The financial sector ETF bounced off support around $79 and traded back to key resistance at $84. A solid break over $84 would be the start of wave 3 of a 5 wave move to the upside. Next target $92.50 and $96.50. Chart is bullish,

LABU: After a strong move off a double bottom at $49 area, the biotech ETF has pulled back to support near the 200 dma around $103. The 50 ema is crossing up through the 200 dma (bullish). But after nearly a 200% move it needs to consolidate and build energy before the next move up. Chart is bullish.

SMH: The semiconductors are so strong, powering again to new ATHs (with gusto!). It looks like wave 5 in wave 3 of a major 5 wave move up. Our targets remain at $210 and $240 for this year. Chart is super bullish.

GUSH: Oil remains under pressure with lots of supply. As such the oil stock ETF continues to sell off. It failed to hold support around $29. $26.75 next level of support. It is hemmed in by a long-term declining tops line. The 50 ema has crossed down through the 200 dma. Chart remains bearish.

NUGT: The gold miners remain under pressure, coming down to test support around $26.50. Failure there takes it to $23. It is hemmed in by the long-term declining tops line. Chart remains bearish.

Technical Indicators: With the markets breaking out to new ATHs the technical indicators remain neutral. Less than 50% of stocks are above their 40 dma and the McClellan Oscillator is -62.92. The mega-caps (VIX) show no fear at 13.30. So there is lots of energy for this market to continue to trade higher as we are not overbought (in fact, mildly oversold). There is lots of room for this market to continue to trade higher.