What I Expect In The Next Few Days
Folks, everything I’m looking at is hitting resistance
or completing a bearish pattern. OK…maybe not everything but the
majority of daily and weekly charts are not at a point that I would be a buyer.
Let’s review a few ETFs and Futures contracts:
First, take a peek at the
weekly Biotech HOLDRs
(
BBH |
Quote |
Chart |
News |
PowerRating). This ETF
has rallied 59% or almost 39 points since July of 2002. The previous rally in
2001 was 39 points as well. As we hit this symmetry level BBH is also hitting a
Fibonacci price resistance zone from 101.50-105.50. If that zone and symmetry is
broken to the upside there is an Air Pocket all the way up to 114 which could
present a momentum long trade opportunity. Outside of that event, this chart
appears to be ripe for a sell off.
Next, is a daily chart of the
S&P 500 SPDRs
(
SPY |
Quote |
Chart |
News |
PowerRating). This is interesting in that we have
completed a Bearish Gartley pattern into a Fibonacci resistance zone as we have
crossed the 200 day SMA. I have seen chart after chart where a bearish pattern
like this is completed in the process of crossing the 200 day sma. More times
than not it sucks investors into long trades only to fall apart. So, my
caution….be careful on longs at these levels…and I am not looking for longs in
SPY at these levels either. If anything, I’m ready for a short trade.
Below is a daily chart of the
Nasdaq E-Mini contract
(
NQM3 |
Quote |
Chart |
News |
PowerRating). This
contract has hit a large resistance zone from 1127 to 1158. Not only that, but a
Bearish Butterfly pattern was completed on Tuesday. The candlesticks over the
last couple of days are also alerting me to be aware of a potential sell off to
develop. My target if the sell off does develop is down to the 1035 to 1050
zone. The flipside to this contract is if we clear the 1158 level. In that case
we have a nice little Air Pocket up to 1214 for a potential momentum long
opportunity. The price decisions zones are there. Map your plan.
Finally, below is a weekly
chart of the Semi HOLDRs
(
SMH |
Quote |
Chart |
News |
PowerRating). Note
that after the Bullish Gartley completed in February we have rallied over 36% or
7 points. We are now at a key resistance zone and price decision for
(
SMH |
Quote |
Chart |
News |
PowerRating).
That zone is from 27.00 to 28.75. Again, the last couple of days of
tailing/shadow candlesticks are concerning and are alerting me to a potential
sell off in the near term. Also, as we consider the flipside scenario…if SMH
clears the immediate resistance zone there is an Air Pocket opportunity from
28.75 to 31.00 for a long momentum trade. Outside of that, I would anticipate a
sell off around these levels.
The theme with all of these
charts is that we are hitting resistance and to expect a sell off to develop in
the next couple of days. If it doesn’t and resistance is broken, then be ready
for a momentum type environment to the upside for a few sessions. For now…I just
can’t pull the trigger on long trades.
Until Friday!
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