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At this point, it looks as if the ETFs we follow have finished their short-term pullbacks. They continue to fall back into a consolidation after every small push higher.
Two weeks ago QQQQ invalidated its possible head and shoulder formation, but with the recent consolidation the ETF could be carving out another head and shoulder pattern. The left shoulder would be the old head from May 23, the new head would have been formed on June 1, and the second shoulder is in the process of being formed. A break above 47.50 invalidates the possibility of this head and shoulder pattern. With the 50 day moving average increasing, we feel it is likely that the formation will be invalid and we will be seeing new highs in the coming days.
SMH fell into our support lines and broke below the 50 day moving average last week, before moving back above it the following day. This strongly suggests that the pullback is over for SMH. A sustained break above the 37.50 area would confirm this.
IWM is currently right below its old resistance area of 83. With the 50 day moving average steadily increasing, we feel that the recent pullback has ended. A break above 84 invalidates the possible head and shoulder pattern being formed in this ETF. The left shoulder would be from May 23, the head on June 1, and the second shoulder would be in the process of being formed.
It is difficult to get much traction in this market. As soon as the ETFs begin to move higher there is a pullback. Unfortunately, we continue to be in a market of extremely low volatility. In these markets, patience is needed.
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