Tonight our mid-term system triggered a sell signal. We encourage all of our subscribers to make the necessary changes before tomorrow's open. The default allocation is an even short of QQQQ, SMH, and IWM.

The first chart below is of QQQQ. We have placed blue Fibonacci retracement lines on the chart to show how the ETF has now retraced 61.8% of its recent fall. We have also placed a diagonal line over the volume bars to show how the volume has consistently fallen the past few weeks. The last few days have also been small price moves higher. This accompanied with the light volume is certainly a bearish signal. The FOMC policy statement is tomorrow as well. This is contributing to the low volatility and low volume. It is still possible for QQQQ to make a run for 54 or 55 before a mid-term pullback. If today or tomorrow does mark the top then we believe the ETF will fall to the 50.30-50.60 support area, otherwise a move back to 2007 highs should end the pullback in the 52 area.

SMH has not hit our target area yet. We still think the ETF could push to 34 or 34.50 before a mid-term pullback begins.

IWM ran up against its 50 day moving average today. It has also retraced half of its recent decline. We could see the ETF pushing to 80 before a reversal. A move above 80 would push IWM to 82. Our target for this pullback is the 76-77 area.

We always encourage you to make the change at tomorrow's open despite our subjective analysis. Our objective system will always outperform subjective analysis. We offer these commentaries for the purpose of education only.