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As of now, it looks as if the last week's three day sell signal was well placed, but unfortunately the next day's open for the switch to short and then the switch back to long (today's open) hurt the gain. With Wednesday's open being so much lower than the previous close and today's open so much higher than yesterday's close we lost a possible additional profit of almost 4% on QQQQ. The potential profit on SMH and IWM was less. In the past, our mid-term system has performed significantly better when trades are executed at the next day's opening price. Unfortunately, this was not true for the last two trades.
QQQQ is in a sensitive area right now. As the ETF broke above the 49 resistance last week before reversing, a fall to the 47 area would be negative, and a fall to 46.70 could pose a problem. We really need QQQQ to stay above the 47.40 support area. A pullback after a breakout is fine, but we do not want a pullback back to the shoulders of the inverted head and shoulder pattern. This is too far of a fall to still feel comfortable being bullish. Today will form an outside day. Whether the ETF closes tomorrow above today's low or today's high will be crucial, as the resulting move should be rather large.
SMH is in a similar situation as QQQQ. The ETF also broke above its pattern last week and we need to see it stay above 37. SMH staying above today's low would be much preferred, but the bullish argument is still safe with a move to 37.
IWM looks the least healthy of the three. Our support lines were broken this morning. IWM has also formed an outside day and tomorrow's close will be very relevant. If we were only looking at IWM, our market outlook would be bleak.
The next day or two should shed light on the market's current state. A close above today's high would be extremely bullish for the market, while a close below today's low will most likely lead to further declines in the short-term.
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