Just like the past several weeks, the stock market has continued its sideways action. It is possible that we are beginning a new run in QQQQ and SMH, but IWM has a bearish looking pattern at this point.

Just like the past several weeks, the stock market has continued its sideways action. It is possible that we are beginning a new run in QQQQ and SMH, but IWM has a bearish looking pattern at this point.

QQQQ has crossed above its 50 day moving average. The close above the average last Thursday was also on high volume, which we view as bullish. The ETF stayed above the moving average the last two trading days with little upside momentum. This action is quite typical after such a break. It is possible that a cup formation is being formed. The beginning of the cup would be December 18th, the bottom being the end of December, and the recent action would be the start of the right side. QQQQ never closed below our 43 support line which also suggests that a bottom may be in place. A break above the 44.90 area would confirm the new leg higher.

SMH has barely broken above the higher downtrend line. A strong move higher from here would suggests that the ETF is heading toward 35, before our resistance line in the 35.70 area.

IWM is looking the most bearish of the three ETFs we follow. The move from the last two months could easily be viewed as the formation of a head and shoulder. 76 is the last line of critical support and also the area that if broken will confirm the head and shoulder formation. It is extremely important for IWM to not close below this line and to close above the 50 day moving average within the next few trading days.