It is possible that the stock market is in the process of forming a base. The other possibility is that the recent sideways movement is a consolidation before another move lower. It is difficult to know the next move in the stock market, but if we do fall from here, the move down is currently well over half over.

QQQQ ran into resistance at 48 again today. Since we have already broken above this level and hit resistance at 49, we can assume that another sustained break higher would push the ETF to 49 again, and then to the 49.70 area. Basically, we will know the correction is over and the bottom is most likely in when there is a sustained break of 48.

SMH has been in a very loose inverted head and shoulder pattern. The first shoulder was formed at the end of July, the neck at the beginning of August, and the second shoulder was just formed. If SMH b! reaks the 38.70 resistance we can assume that the bottom is here.

IWM is also in a loose inverted head and shoulder pattern. We have used Fibonacci retracements to show that a sustained break above the neckline (80 area) could bring the ETF above 86. This is assuming that IWM moves the same distance as the height of the formation.

It is possible that the bottom has already been formed from the recent correction, but even if the market continues to correct from here, the fall will be less severe than the first leg down.