Everything posted under the short-term outlook heading is meant for experienced traders willing to take on more risk.
Three indices closed above the suggested daily targets:
Dow: 30,459, SP500: 3837 and the Russel2000: 1775
The Dow also closed above the suggested targets on a weekly basis, and perhaps the Russell 2000 could achieve the same feat this week. Now barring another black swan event like the Fed coming out with the intent of purposely killing this rally or some massive change on the geopolitical frontier, the momentum has changed, and the path of least resistance is up. The markets are now climbing a wall of worry, which is typically a bullish development
Even though the Dow was the first index to end the week above the suggested price target, it is not the strongest index; that title goes to the Russell 2000. Surprisingly it is the Nasdaq that is the weakest index. Indirectly this illustrates the illusory Nature of this economy and how high-interest rates can wreak havoc in such a short period. If the economy were strong and could survive without constant infusions of easy money, it would not have started to buckle until interest rates reached the 7% mark. In the aftermath of the 08-09 crash, real growth was replaced with financial engineering, a nice word for financial shenanigans.
The RUT (Russell 2000) was the only index not to put in a new low in October. In other words, it generated a significant Intermarket positive divergence signal.
The Russell 2000 might be the strongest because this market appears to be pricing "a Fed pivot". The RUT is full of small companies, and it is much harder for them to operate in a high-interest-rate environment, and they generally have less of a cash cushion.
The weekly chart of the Russell 2000 (RUT)
While the other indices traded to new lows, the Russell did not do so, which triggered a positive divergence. Another positive development is that the MACDs and RSI are trading significantly higher than in June, when the RUT put in a new low for the year.
Thus risk takers can use pullbacks to open positions in solid companies listed in the RUT or go long the following ETFs IWM (non-leveraged) and UWM (leveraged)
Dow potential targets
The Dow, which started off weaker than the Nasdaq, has now taken the lead. There are two possible higher targets for the Dow.
The first target falls in the 34,300 to 34,650 range. This is former support that has turned into resistance.
The second target falls in the 35,100 to 35,300 range. This is a low-probability target.
However, before the Dow has any hope of striking the first targets, it will need to close at or above the 32,100 to 32,250 range. A weekly close at or above 32,250 will carry more weight than a weekly close at or above 32,100
Potential targets for the RUT (Russel 2000)
The RUT now has the potential to trade to the 2031 to 2045 ranges with a possible overshoot to 2100
Long term outlook
Lithium
LIT is the ETF we were referencing in the last update.
Biotech sector
It just moved into the deeply oversold ranges, so it is now on our list of "sectors to monitor", as it will eventually make for an excellent long-term play.
