Indices to Watch January 8, 2024

We have issued this week's Indices to Watch Report for January 8, 2024. 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 SPX formed a massive double top, nearly tagging the Jan 2023 ATH. It has pulled back to support around 4700. Profit-taking has set in after a massive move from November (16%). Next levels of support are 4650 and 4600. I would expect SPX to trade to new ATHs before the end of the month. Chart is bullish but taking the pause that refreshes. The caveat will be earnings which start next week but I think the markets are broadcasting that investors will not be disappointed.

NDX - After trading to new ATH profit taking set in and the NDX sold off sharply to support near 16150. The chart looks like the current leg up is wave 3 of a massive 5 wave move that started in Jan 2023. Look for another week of consolidation before the next leg up starts to the upside. Targets 20000 and 23000 by the year end 2024.

DJIA - The Dow traded to new ATHs at the end of the year. Key support 37000. this move is a massive break out for markets. Investors are anticipating strong guidance through earnings season. Look for the Dow to trade to 43000 this year.

DJTA - The fly in the ointment could be the transportation index. It remains in a broad consolidation pattern and has not yet confirmed the break-out moves of the Dow and the SPX. It currently is neutral. A strong transportation index is needed to reflect a strong economy. Earnings season will be key. Support 15000 and resistance 16750 and 17000.

IWM - After breaking out of a 19 month consolidation pattern the broader market ETF failed to hold the key $200 break out. It pulled back and filled the gap $193 area and so far is holding support. Failure here takes the ETF down to $189. Earnings and forward guidance will be the key. Technically, the chart is back into a neutral range.

FAS - We put a swing on the financial sector when it broke the long-term declining tops line. It is now on the bottom rising channel line at at resistance at $84. The 50 dma has crossed up through the 200 dma and the 200 dma is turning up. Support $78.65. Look for the ETF to test $92 by end of the 1st quarter.

LABU - We put a swing trade on when the biotech ETF broke through the long-term declining tops line adding nearly 60%. The 200 dma looks to be turning up as the 50 dma approaches. A cross of the 50 through the 200 would be bullish. The ETF is in an area of resistance but the chart has turned bullish after a 2 year bear. Targets $158 and $188 by the summer.

SMH - After making a strong break out through a massive multi-year double top profit taking has set in with the semiconductor ETF pulling back near the break out at $161. It is finding support around $165.50. Targets this year of $200 and $215. Chart is very bullish.

GUSH - The oil stock ETF is neutral at best trading in a short-term range between $32.50 and $35. It is back under its 200 dma and could pull back to fill the gap at $30.65. The economy remains strong (bullish for the commodity) but there is lots of supply (bearish). Look for the ETF to continue to trade in here sideways for the next few months.

NUGT - The gold stocks remain hemmed in by a multi-year declining tops line. It is coming into the apex of a bear wedge and remains under the 200 dma. It is surprising that the ETF is so weak despite the strength of the underlying commodities. It needs to get through $37.50 and $41 to show a change in direction. For now the chart remains bearish.

Technical Indicators - 66.45% of stocks are above their 40 dma down from an overbought reading of 80%. The McClellan Oscillator also has turned negative at -74.71. It has bounced off an oversold reading of -126. VIX remains very bullish at 13.35. there is no fear in the mega-caps. The level of these indicators is healthy for markets to work out the excessive bullishness and huge recent moves. It is bullish for markets, though, that we approach an oversold position at key support levels. Look for markets to continue to trend higher this year.