After Friday’s close our mid-term system triggered a sell signal. From a subjective point of view, it looks as if the indices we follow are extremely close to a mid-term top. It is quite possible that tomorrow could be the reversal day to begin the new downtrend.

QQQQ has been pushing higher on rather light volume for several days now. We have placed a blue uptrend line on the chart showing the current trend. A break of this line could signal the beginning of the new downtrend. As the length of the recent consolidation (46.70-48.00) was small, it would not be surprising to see the breakout only last to the 49 area. Support is indicated on the chart with horizontal lines. The 50 day moving average will also serve as support.

SMH has broken out of its recent consolidation. The 40 area is strong resistance and it is unlikely that the ETF will be able to push above it. The consolidation in SMH was also small and we believe that the ETF is extremely close to a mid-term top. Support is indicated on the chart.

IWM failed to break above all-time highs in its recent advance. This is a small concern. Usually indices break above highs before they begin a mid-term pullback, but as QQQQ and SMH have already done so it still quite likely that we are closing in on the top.  If IWM does break above all-time resistance in the next few days it is likely that we will have to wait longer before the pullback begins.  Most likely the ETF will not be able to push above the recent resistance.

If you have not already done so, we would encourage all subscribers to close out their long positions and initiate short positions in the three ETFs we follow: QQQQ, SMH, and IWM. If the mid-term top is not here yet, we feel it is right around the corner.