The charts on the indices are in a neutral position right now not showing true direction. There are some patterns developing but nothing for sure at the moment. The SPY after a 300 point drop rebound to form a double top at around 2810. It then backed off sharply for 5 days. The last two days it rebounded after a big reversal day on Thursday. It looks to making a reverse head and shoulders pattern. But it will need to get up through the 2810 level. In the alternative, we could be forming a bear wedge and a break of 2650 area could take the markets back down to 2600.
NDX, though not quite the same pattern, also in a neutral position. It looks to be forming more of a bear wedge rather than a reverse head and shoulders. It is weaker than the SPY and a break below 6700 could take it down to 6600 and then 6480. If the market really starts to sell off in a wave 3 then the measured move would take the NDX down to the 6200 range. If it trades to the upside through 6950 we could see it trade to the top of the declining channel line at 7000. It would need a lot of momentum to carry it much higher.
The DJ-20 (Transportation Index) also appears to be forming a reverse head and shoulders pattern. It is finding support around 10300 but needs to break through the neckline of 10700 for a move higher. Like the other indices, it is neutral at the moment with no clear direction.
The IWM continues to be in a down trending channel and is forming a bear wedge in here. It is trading at lateral resistance right now at 152 and is finding support at 148. If this the start of wave 3 to the downside we could see IWM around 141 and then 137.
The indicators we follow, McClellan Oscillator, VIX and stock trading over their 40 day moving averages, are all very neutral at the moment. As such, they are not showing any direction at the moment showing that the market is neither overbought nor oversold.
FAS: The financial ETF looks to be forming a reverse head and shoulders pattern similar to the SPY. But, be wary, it could also be a bear wedge. The chart is neutral at the moment and we will need a few days yet to see which way it resolves.
LABU: The biotech ETF continues in a down trending channel. It looks very weak. It is mid channel and the last two days have rallied the ETF off of support. It has resistance in the $58 area. Until it breaks this channel for for biotechs to continue lower.
SMH: Semiconductors look much like the financials. But it does look like a bear wedge is forming. It needs a few more days to resolve and give us direction.
AAPL: After making and head and shoulders type pattern the stock rolled over with the markets and plunged $50. It did find support at the long term up trending channel line at $187. But, if it breaks that support line, we could see AAPL plunge to the $160 area. It is not a strong looking chart at the moment.
AMZN: The stock has dropped nearly $580 from its high in October. It made a 3 wave decline and the 4th wave up did take it to an almost 50% retracement level. But,. from there it failed. On Thursday it did have a big reversal day and Friday an inside day. But it needs to hold support at $1550 area or we could see it continue in a wave 5 decline to $1460 and maybe $1400.
BABA: The stock has broken out of a long declining channel pattern trading through lateral resistance at $154. It appears to have made a reverse head and shoulders pattern with the stock trading right at the critical neck line area. If this does break to the upside, look for a move to $170 area.
FB: Stock just continues to decline in the down trending channel. This is not a stock I would look to be trading long. It is an ugly chart as I have been writing about for the past 2 months and looks to continue lower.
GOOG: After breaking down out of a bear wedge last September the stock dropped over $200. It now appears to be forming another bear wedge. It is at the apex of that wedge trading up to the declining tops line. It needs to hold $1020. Failure there takes the stock to $990 and then $950.
INTL: The stock seems to be ahead of the other major components. I was talking about this stock being in a declining channel now for several months. But in late October it made a V bottom right hand extension pattern and has broken out of the declining channel line, testing its support several times. INTC looks to be more of a buy than a sell at the moment. It needs to get through $50 to get going. If it does, it could trade to $53 quite quickly.
MSFT: After breaking the long term trend line the stock rolled over. It did snap back to resistance at $112 area but now has backed off again. To big reversal days last week took it back to lateral resistance at $109. It does look like a bear wedge though. Under $103 and the stock is trading down to $97.
NFLX: After forming a bearish rising wedge the stock plunged last week at the apex of the sedge and traded back down to the previous recent low near $270. This could be wave 3 of a 5 wave decline. If it fails the $270 level it could trade to $250. Again, not a stock I would be looking to trade long.
NVDA: Stock plunged on Friday on poor earnings. I am not expecting any kind of rebound here. It may consolidate for a few days before heading lower. Look for it to trade to $153 and $146.