These Price Objectives Are Possible

  • September 10, 2003
  • Derrick Hobbs

Now What?

We are starting to get some
downside movement out of our Bearish daily and weekly patterns. Does this mean I
have cut my horns off completely? Absolutely not. In my nightly service I
discussed the fact that we have a couple of items coming together that causes me
extreme concern for long positions in the technology and hardware industry, more
specifically:

  1. This industry is almost 2 std
    deviations above its mean, and

  2. We have bearish patterns in
    Semiconductors and other index-tracking stocks.

So anyway, from the high point,
the Semi index is now down almost 7% in two days, while many stocks have fallen
10%-20% in a very short amount of time. That’s why in earlier columns I
mentioned that I just couldn’t bring myself to getting long
AT THAT PARTICULAR TIME. Enough on the past.

The question that is in my mind at this
point is this:

Do we have a minor correction and continue onward and upward? For me, that would
be defined as holding support and symmetry of previous corrective declines in
this uptrend. Or, do we violate 60 minute chart support and break symmetry and
have a longer correction unfold? I have no clue which one will unfold. At this
point, I find myself stopped out of long positions that I held and trailed stops
on, and recently triggered into shorts. So I’m a bit overweight short right now.

Based on 60-minute charts, it looks like tomorrow and Friday could be a minor
bounce up out of these lower time frame patterns and price support. I’ve
included an example of that with the Dow Diamonds 60 minute chart below.


image src=”https://tradingmarkets.com/media/2003/Derrik/dh091003-01.gif” width=”513″ height=”605″ />

However, if support like this
and patterns like the one above is broken, it is my experience that this is an
earlier indicator that we are in for a multi-week corrective move (or a quick
hard decline is always an option too). Also based on the fact that we are
hitting major weekly chart Fibonacci price resistance and specific cycles that
we’ve discussed in my report, I am inclined to lean toward the deeper correction
option.

Again, here are the daily charts that I have continued to show you for a couple
of weeks that I think are controlling price movement at this particular time.
I’ve also listed objectives off of these patterns which translate to 10%-20%
downside action is well within the realm of possibility.


image src=”https://tradingmarkets.com/media/2003/Derrik/dh091003-02.gif” width=”514″ height=”605″ />


image src=”https://tradingmarkets.com/media/2003/Derrik/dh091003-03.gif” width=”518″ height=”605″ />

Have a great night.


Derrik Hobbs

 

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