We believe that the stock market is extremely close to a mid-term top. Most indices are telling us that the recent pullback was only a short-term fall within the mid-term uptrend, but we feel the stronger fall will be starting within the next few days.

QQQQ has managed to stay above the blue uptrend line we have annotated on the chart. A break of this line should eventually bring QQQQ to the 45.50 area. The support lines and the 50 day moving average below will serve as support if this area has a sustained break to the downside.

SMH looks to be in the process of forming a double top formation. The high from April 24th should prevent a further move higher in the ETF. If this resistance reverses the direction of SMH, our first target area is 36.50. A sustained break of this area should bring the ETF to the breakout zone of 35.50-35.70.

IWM is also approaching April 24th resistance. The ETF will be headed to 81 at a minimum this sell signal. The next support level is the 50 day moving average, followed by the two support lines directly below it.

We believe that the stock market will soon reverse its current momentum and start a mid-term downtrend. In addition to our system already triggering a sell signal, the market is extremely overbought and it is unlikely the uptrend can last much longer without a pullback.