TECHNICAL ANALYSIS (by Intraday Dynamics)
Major Indices Week of January 19, 2024
Stocks surged sharply late in the week, carrying the Dow, the S&P 500, the SPY (SPDR), the FANG and the Nasdaq 100 to new record highs. Two distinct scenarios are emerging with the new highs. The first is that this poke to record highs is still part of a ‘running correction’ that marks the end of the first leg up of this impulse move…in which case we would continue to see more churn between here and 37000 on the Dow. The second is that this is the beginning of the next leg which should minimally carry the Dow to the overhead targets at 38378.5-38454.7 with a shot to carry the Dow well above the 40K level with one target at 40245.4 and opening targets into the 45K+ area (45,244 to be exact). Gaps right now would validate the more bullish wave counts (possibly indicating a third wave move). In that vein, here’s a chart of secular bulls over time. Sentiment remains high, however, social media (which is a cesspool of disinformation) is filled with ultra-bearish sentiment and ‘sh*t posters’ fighting the trend. Bonds took a hit last week as a combination of the latest CPI data and continued strong jobs data, putting a kibosh on the belief that rates will come down soon. We are in the ‘bad is good’ and ‘good is bad’ phase of the interest rate dance. In addition, there are $7.6 trillion in US government debt maturing in 2024. And, as outlined in last week’s update, the global shipping issues are putting pressure on near-term inventories. It’s important to note that there is some potentially critical timing coming up this week, hitting just before the Q4 GDP data is released on Thursday (median forecast is 1.7%). Consumer Sentiment took a big jump higher, as reported on Friday.
Consumer Sentiment
SPDR-SPY
New record highs
2024 is a year where over 60% of the globe will be in critical elections. It is also the year of the peak Solar Cycle (the solar cycle is an 11-year cycle).
Solar Cycle
The short-term charts ended the week overbought, the daily stochastics are hooking higher but need higher prices to validate, and the weekly charts are moving into overbought territory. The secondary markets continued to take it on the chin relative to the broader market. The Dow/Russell chart has moved above the downside breakout area. The RSP/SPY got crushed last week.
10YR-2YR Yield Curve
(with recessions marked)
Another key chart to keep an eye on the the XLE, energy. (Chart from TC2000)
XLE-SPDR Daily
52-Week A/D Line
Sentiment indicators remain in greed/extreme greed readings and continued to flatten out last week. Last week in the AAII Sentiment Survey, Optimism Falls While Neutral Sentiment Rises. The Dow A/D line sits at 5679, a multi-year high. The VIX closed lower on the bottom of the week’s range after moving to the highest reading in two months. The Put/Call ratio moved to 0.88, reflecting greed. The 52-week, A/D dropped to +2.81% which indicates greed. The Dow closed the week up +0.72%. The S&P was up +1.17%. The Nasdaq ended the week up +2.26%, the FANG was sharply higher into record highs, up +2.65% and the Russell ended lower as the secondary market can’t sustain up moves, settling -0.34% lower. The 10-year notes were down hard and the weekly is overbought. For S&R numbers, see the most recent Special Report. The CRB was up +0.48%…crude oil closed slightly higher toward the upper half of an inside week’s range, gold sold off sharply and closed to the lower half of the weekly range. The CRB is up +0.90% on the year so far. The CoT remains the same saw with asset managers buying with dealers selling… commercials bought last week while speculators were sellers.
Timing Points
This Tuesday/Wednesday marks critical timing. Further timing updates will come later this month.
- 01/23-24 *** X Key week for financials
CNN Fear & Greed Index
AAII Investor Sentiment Survey
Dow Jones Industrial Average Hourly HLC
The Dow hourly ended the week in overbought territory as prices broke out of the running correction. Again, validation is critical now to sustain continued upside movement. Resistance is 37933 and 37961. A breakout rally over 37961 should renew momentum toward the upside targets of 38378.5 and 38454.7. Closes over 38454.7 suggest a move to long-term targets at 39075. Closes over 39075 offer counts to targets at 40245.4 with longer-term potential to targets in the 45244 area .
Support is at 37431 and pivotal at 37130/37120. A breakdown under 37120 can carry to 36868 with full counts to critical short-term support of 36617/36610. Closes under 36610 setup a move toward 35792 through 35734 with trading support of 36306. A breakdown under 35734 can carry to 35130 with potential to critical short-term support of 34468/34460 through 34391. Closes below 34391 open counts to 33728 with potential to 33297. Closes under 33297 open counts to critical long-term support of 32203/32190 with support at 32327.
Dow Jones Industrial Average Weekly HLC
Resistance
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Support
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S&P 500 Cash Index
The S&P hourly is overbought on Friday’s close. The market set new record highs, for the first time since January of 2022. Resistance is 4842 and 4849/4850. Rallies over 4850 should test 4952 with a shot at potential upside targets in the 5144 area. Closes over 5144 set up a drive to 5288 with counts to 5432. A breakout over 5432 will open potential to the 5720 area.
Support is at 4804 and 4780. A breakdown with closes under 4780 sets up a move to 4762 with counts to 4743/4740. Closes under 4740 suggest support at 4682. A breakdown under 4682 should test 4523. Daily closes under 4523 counts to 4472 with potential to critical short-term support of 4385/4380. Daily closes under 4380 set up a move to 4326 with potential to support at 4166 and critical support at 4166/4160. Daily closes under 4160 open counts to critical long-term support of 3992/3985.
S&P 500 Index Weekly HLC
Resistance
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Support
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