The stock market continued its slide since our last commentary, but our view continues to be bullish. With the major indices all correcting over 10% since their highs in November, we have approached the area where the reversal is likely to happen.

The NASDAQ 100 is one of the few indices that has formed any type of base the last few weeks. Unfortunately, it has formed a descending triangle, as can be seen in our chart of QQQQ. Descending triangles are typically bearish formations. If the ETF is able to have a sustained break above the descending blue line then we will have reason to believe that the bottom of this correction has already happened. A break of the lower support line could suggest a strong decline to come and may lead us to reevaluate our position.

SMH continues to fall and break our horizontal support areas. You can see from the chart that the recent decline is longer than the original fall back in July. This would suggest that the correction is close to its end. The red lines signify the two legs down and the green line shows the move higher in between.

IWM closed at its recent support today. 73 is a key area. With the recent break of the August low, it is important for the ETF to quickly rebound. A sustained break below 73 would lead us to reevaluate our current bullish view.

So far the recent fall in the stock market can be categorized as a correction within a larger trend. If the indices continue to fall from here, the percentage drop from recent highs would be much larger and may lead us to reevaluate our bullish position. Currently, there is no reason to be fearful as the percentage drop for most indices is between 10-15%.