We believe that the indices we follow are most likely in the middle of the downtrend that will lead to a buy signal.

We believe that the indices we follow are most likely in the middle of the downtrend that will lead to a buy signal. We said from the beginning that we believed that the gain on this sell signal would only be a few percentage points, and we believe this to still be the case. After the small pullback, we expect another strong uptrend, which should increase our portfolios by much more than a few percent.

Tonight we have charts of QQQQ, SMH, and IWM. We have placed lines on the charts showing the first half of the downtrend (red line), the recent upward correction (green line), and the fall that we predict will happen in the next few days (red line).

The first chart of QQQQ shows the fall that started in the beginning of September, the uptrend that began on Friday, and our suggested final target of 37.40-37.60 (the support lines).

The second chart of SMH shows the downtrend that started toward the end of August, the recent uptrend that started last Friday, and our suggested target of 31.70-32.10 (the support lines). SMH is also approaching its 50 day moving average, which could easily act as support and the end of the downward fall.

The final chart of IWM shows the first leg down which started at the beginning of September, the uptrend that started last Friday (IWM could still push a little above the 71 area), and our target area - 69.

It is certainly possible that the downtrend has not started and we still have one final swing higher before the fall, but we think it is more likely that we are in the middle of the downward move. The stock market has moved sideways for weeks now, allowing the market to become more oversold with little downward price action. This is common in small pullbacks within large uptrends, which is what we believe the current scenario to be.