The U.S. stock market indices experienced some gains after publishing a technical analysis at the December 2023 close, and overbought conditions have resulted in a price correction since mid-March of 2024. The Federal Reserve is slated to announce its latest stance on monetary policy after the conclusion of its April FOMC meeting tomorrow afternoon. Expectations are that interest rates will be held at the current level while Jay Powell delivers another round of Fedspeak on the economy, inflation, jobs, fiscal policies, and other issues amid an environment rich in geopolitical risk, war, and financial crises. Meanwhile, U.S. inflation is ticking upward as Gross Domestic Product (GDP) data for 1Q24 collapsed and the Fed gets cornered with stagflation on the table. Today’s report on consumer confidence was not positive after plunging to the lowest level since July 2022, and expectations for more jobs were the lowest since 2011.

 

I suggested in recent analyses that it was not an ideal time for retail plebes to invest capital in the stock market, taking profits was okay, and the trading environment was for seasoned and professional traders.  Let’s move on to the Dow, S&P 500, Nasdaq 100, and Russell 2000 charts to see what happened since January. Note that a technical analysis with a weekly candlestick chart focuses on potential near-term (a few weeks) trading opportunities for short-term swings or intraday scalps. To view a larger version of the following charts, mouse over and select or right-click and choose a “view image” option.

 

$DJI Dow Jones Industrial Index weekly chart as of Apr. 30, 2024…

 

Excerpt from the Dec. 2023 close weekly chart analysis:

“The dovish FOMC announcement on Nov. 1 launched a rally after printing a low of 32,327 on Oct. 27. The subsequent price action breached the 50 Exponential Moving Average (EMA), the trendline drawn down from Jan. 2022 and summer of 2023, then the 35,679 lateral resistance and left them all in the dust. The Fed Pivot on Dec. 13 turbocharged the rally with a spike above the Jan. 2022 all-time high and printed a 37,779 high last week that’s just shy of a 17% gain over 9 weeks. The Dow closed for the week at 37,690. The Dow is in blue sky territory with no price history to identify resistance. I included a few Fibonacci Extensions on the chart that provide levels to keep an eye on if the rally extends into 2024. The next upside target is the 23.6% Fibonacci at 38,909. Support rests around the 35,679 lateral. The DMI-ADX is in a bullish Alligator Tongue power trend but hesitating while it digests the recent price spike into all-time high territory. The price is extended well above the 50 EMA, and buy Volume has fallen for the last three weeks. There could be some profit-taking and a breather on the horizon. The chart is bullish, and caution is warranted in the near term.”

The Dow printed an all-time high of 39,889 in mid-March, was just shy of the 38.2% Fibonacci Extension level, and the price action closed today at 37,816. The correction since mid-March has nearly retraced all gains since the Fed’s dovish pivot on monetary policy in Nov. and Dec. 2023. Support rests around the 23.6% Fibonacci Retracement level at 37,239, the Jan. 2022 high at 36,953, and the 50 EMA at around 36,500. The FOMC decision tomorrow will determine the near-term direction in price. The chart is neutral, and caution is warranted if Jay Powell has a hawkish tone at the presser.

$SPX S&P 500 Index weekly chart as of Apr. 30, 2024…

 

Excerpt from the Dec. 2023 close weekly chart analysis:

“The rally is just as prominent and extended on the S&P, but the price action has not breached the Jan. 2022 high of 4,819. Since printing a 4,104 low in late October, the price spiked to a high of 4,793 this past week and is just shy of a 16.5% gain over 9 weeks… Support is around the 4,607 lateral. The S&P closed for the week at 4,770. The DMI-ADX is in a bullish Alligator Tongue power trend but hesitating while it digests the recent price spike that’s extended well above the 50 EMA, and buy Volume has fallen for the last three weeks. There could be profit-taking and a breather on the horizon. The chart is bullish, and caution is warranted in the near term.”

The S&P printed an all-time high of 5,265 in mid-March, was just shy of the 38.2% Fibonacci Extension level, and the price action closed today at 5,036 after printing a low two weeks ago at 4,954. Support rests around the 23.6% Fibonacci Retracement level at 4,846, the Jan. 2022 high at 4,819, and the 50 EMA at around 4,710. The FOMC decision tomorrow will determine the near-term direction in price. The chart is neutral, and caution is warranted if Jay Powell has a hawkish tone at the presser.

$NDQ Nasdaq 100 E-Mini Futures ($NQ1) weekly chart as of Apr. 30, 2024…

 

Excerpt from the Dec. 2023 close weekly chart analysis:

“The bullish Half Staff Flag was confirmed in this rally since the 16,063 lateral and trendline drawn down from the 2021 high were decisively taken out. The subsequent price spike printed an all-time high of 17,165 this past week, which is just shy of a 21.5% gain over 9 weeks from the 14,140 low in late October… Support is around the 16,063 lateral and trendline drawn down from the Nov. 2021 high, and the price action closed for the week at 17,023. The DMI-ADX is in the early stage of a bullish Alligator Tongue power trend but hesitating while it digests the recent price spike that’s extended well above the 50 EMA. Buy Volume remains strong and was much lower over the past week. There could be profit-taking and a breather on the horizon. The chart is bullish, and caution is warranted in the near term.”

Excerpt from “A.I.-Related Stocks are Bubbling the Nasdaq Part 2” Jan. 31, 2024 weekly chart analysis:

“After a Plunger Candle printed a high of 17,165 in the last week of Dec. 2023 and closed at 17,023, an expected pullback totaled 705 points with a close at 16,460 in the first week of January… Last week’s high printed a Shooting Star (aka Plunger Candle) with a 17,793 high and 17,527 close… Support is found at the 16,767 Nov. 2021, the 6,350 lateral at early January lows, 16,063 lateral drawn from mid-July 2023 at the Half Staff Flag high, and a fluent price point at the 50 EMA. The next target for a new high is the 23.6% Fibonacci extension level at 18,271. All the major stock indices took a hit today during and after the FOMC presser. The Nasdaq’s DMI-ADX is still positive but unremarkable vs. a solid power trend setup. The current market is for professional traders that scalp or swing the dips and rallies, not passive retail investors seeking core positions to buy and hold. The chart is neutral in a world full of financial chaos and war.”

The Nasdaq printed an all-time high of 18,709 in mid-March that bested the 23.6% Fibonacci Extension level at 18,271, and the price action closed today at 17,511 after printing a low two weeks ago at 17,113. Support rests around the Nov. 2021 high at 16,767 and the 50 EMA at 16,345. The FOMC decision tomorrow will determine the near-term direction in price. The chart is neutral, and caution is warranted if Jay Powell has a hawkish tone at the presser.

$RUT Russell 2000 E-Mini Futures ($RTY) weekly chart as of Apr. 30, 2024…

 

Excerpt from the Dec. 2023 close weekly chart analysis:

“Price action on the Russel is nowhere near its all-time high of 2,461, but the rally from the late October low of 1,639 to the 2,097 high printed this past week is a 28% gain over 9 weeks. This week’s bearish Gravestone Doji at the close signals a potential for a pullback. Support is around the 2,000 lateral, 38.2% Fibonacci, and trendline drawn down from the Nov. 2021 high. There could be additional profit taking and a breather on the horizon. The price action closed for the week at 2,048. The DMI-ADX is in a bullish Alligator Tongue power trend but hesitating while it digests the recent price spike that’s extended well above the 50 EMA. Buy Volume remained strong until this past week, which printed a sell Volume bar. The chart is neutral, and caution is warranted in the near term.”

The Russell had a shallow pullback following a Gravestone Doji at the Dec. 2023 close and then rallied to a high of 2,167 in early April after briefly piercing the 61.8% Fibonacci level at 2,147. The price action closed today at 1,981 after printing a low two weeks ago at 1,916. Support rests at the 38.2% Fibonacci level at 1,952 and the 50 EMA at around 1,945. The FOMC decision tomorrow will determine the near-term direction in price. The chart is neutral, and caution is warranted if Jay Powell has a hawkish tone at the presser.

Biden To Raise Capital Gains Tax To 40% and Taxing Unrealized Gains – Peter Schiff, Apr. 28

 

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