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Upside Targets and Downside Risks

Investors again wait for the monthly jobs report to be announced tomorrow morning for guidance on the health of the economy. The economy continues to recover from the COVID-19 pandemic, but there remain concerns about the sustainability of the jobs market and rising inflation.


Nonetheless, ahead of the economic numbers tomorrow, many key market indexes continue to rally higher. INDU climbed higher and closed today at 34,633.53, gaining 131.02 or +0.38%. SPX also continues to record new highs, booking its 6th record close in a row to 4,319.94 with gains of 22.44 or +0.52%. Nasdaq Composite Index finished the day at a new all-time high of 14,522.38, rallying another 18.42 or 0.13%.


Cyclical stocks such as energy, financials, and industrials were the winners today, while consumer staples and growth stocks drifted lower.


On the macro front, the 10-year US Treasury yield rose 3.7 basis points to 1.48%. US Dollar continues to recover from its recent May 2021 lows, gaining 0.16 or 0.18% to 92.59. WTI Crude Oil also trended higher, adding 0.74 or 1.48% to 40.62, as OPEC postponed a decision until Friday regarding further easing of output cuts.


Technically speaking, we have updated the near-term daily charts and technical levels for INDU, SPX, and COMPQ.

Dow Jones Industrial Average (INDU – 34,633.53)


The recent breakout above the May 2021 downtrend at 34,564 signals the start of the next INDU rally to 34,821-34,849 (6/1/21 and 6/7/21 highs, short-term) and then 35,091.56 (5/10/21 all-time high). Setting a record high would reaffirm the next intermediate-term rally to 36,426-36,669.


INDU continues to lag its larger-cap counterparts as it is still trading below its record high of 35,091.56 (5/10/21). Nonetheless, initial support is 34,240-34,311 (30-day ma and 50-day ma), and below this to 33,106-33,272 (Jan 2021 uptrend, the bottom of the Apr/May 2021 downtrend channel, and 6/18/21 reaction low). Violation here warns of a deeper correction to 32,071 (3/25/21 low) and then 31,362 (200-day ma).


S&P 500 Index (SPX – 4,319.94)


A 2-week base breakout above 4,257.16 (6/24/21) suggests 92.76 points or a short-term SPX target of 4,350. A 2-month breakout above 4,257.16 (6/24/21) also suggests 200.28 points or a medium-term SPX target of 4,457.


Initial support rises to the extension of the 2-week base breakout at 4,257-4,264. Secondary support also rises to 4,204-4,229 or the 30-day ma, 50-day ma, and May 2021 uptrend. Medium-term support remains 4,110/4,057-4,061 (extension of 4/1/21 channel breakout and 5/12/19 and 5/19/21 lows). Violation here warns of a deeper correction to 3,838-3,853.5 (200-day ma, Jan 2021 uptrend, and 5/25/21 low).


Nasdaq Composite Index (COMPQ – 14,522.38)


The recent move above 14,175-14,211.57 confirms a 5-month ascending triangle breakout and suggests +1,209/+1,814.5 points or the next COMPQ rally to 14,607 (top of the May 2021 uptrend channel, short-term), and above this to 14,950 (2-month channel breakout target, near-term), 15,521 (2-month base breakout target, medium-term), and 16,026 (ascending triangle breakout target, intermediate-term).


The initial support rises to 14,211.5-14,264 (bottom of May 2021 uptrend channel and 6/22/21 ascending triangle breakout), and below this to 13,864.5-14,007 (30-day and 50-day ma), 13,451-13,662 (bottom of ascending triangle, Mar 2021 highs, and 6/3/21 low), 13,225 (Mar 2021 uptrend), 12,933-13,072 (200-day ma, 1/29, 2/23, 3/19, 5/12, and 5/19/21 lows).



Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

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