The first of the approximately 250 trading days of 2022 is behind us, so let’s take a look at a few major indexes to see what’s going on.
First up is the Dow Jones Composite, which has been drifting along its ascending channel. It is near its lifetime high, but it had a quick and lackluster day—indeed, it actually closed a tiny bit in the red.
Tech stocks were stronger, however. The NASDAQ Composite’s channel has been a reliable guide for the past year, and we’re about dead in the middle of that channel right now.
The wind in the NASDAQ’s sails continues to be the semiconductor space, which is persistently near lifetime highs.
The S&P 100 looks more cleanly bullish than, say, the Dow Jones Composite. It closed at a lifetime high, and it has safely cleared an area of congestion where it was bouncing around for about six weeks.
One of the weaker big indexes, however, was the Dow Transports, which was a key reason the COMP actually managed to slip lower. You can see how following its lifetime peak (thanks to symbol CAR, which is Avis), it has stalled, and price action has been below its price gap (anchored to that magenta line) for about the past month. I assume higher energy prices are weighing down on this sector of the market.
Lastly, the small caps (by way of the Russell 2000 index) are at a real decision point, expressed by that horizontal line. If prices turn away from this line, we’ll remain range-bound, as we have been for the past few weeks. If it clears above that line, it sets up a prospect of pushing past a more formidable zone of resistance, which is that longer line at the top of the chart.
The stock that grabbed big headlines on Monday (besides AAPL, which pushed over $3 trillion value for the first time ever) was Tesla (NASDAQ:TSLA), which has gained an eye-popping 25% in only two weeks.
The series of “lower highs” ended immediately at Monday's opening bell, and now TSLA has the relatively simple task of pushing past the very thin amount of resistance above that horizontal line.
The stock is only about 3% away from its lifetime highs (established early last November). What I haven’t seen anyone mention is how much money Elon was forced to leave on the table since he had to sell billions of dollars in stock for a tax bill.
It’s too bad for the government that he couldn’t have simply transferred the shares to their account, since those shares would be worth so much more now.
Last thing to mention is crypto—more specifically, Bitcoin. This is teetering in a very dangerous spot right now. As I mentioned early on Monday, if it slips under that horizontal, that should generate a lot of fresh selling. Crypto’s been in bad shape for two solid months now, and this setup might simply be the preface for another meaningful leg lower.
