November 4, 2018
S&P looks to be in a rising bear wedge in wave 4 of a 5 wave pattern. It did hold support at 2700 the last few days but is nearing the apex of the bear wedge. There is also lateral resistance at around 2750. If it does fail the wedge and rolls over then look for a move to the bottom of the channel at 2550. Or if the 5th wave is truncated then we may find support around 2600.
NDX: This chart looks very similar to the SPY. We had a climax sell off in the 3rd wave down to 6560 area and then bounced into wave 4 to the upside. It failed at lateral resistance at 7080 area and looks to have rolled over. If this is the start of wave 5, look for a move to 6450 area.
IWM: Is performing slightly better to the upside but does appear to be in a rising bear wedge. It has support at 153. But if the larger markets roll over this could come off sharply trading to support at 144.
DJ-20: the Trannies have broken out of the down trending channel and are in an up trending channel now. So we will see if this can pull the rest of the market higher or if it succumbs to selling pressure if the other indices fail.
Financials (FAS): After breaking to the downside of an up trending channel the Financials are in a down trending channel now. Wave 4 has taken it to the top of the channel. Friday was a huge engulfing bearish bar and if it breaks through $57.50 area, it could be the start of wave 5 to the downside. Wave 5 could take the ETF down to the $47 area.
Biotechs (LABU): The ETF had a massive sonsolidaiton pattern the last 3 months and now has broken to the down side and is in a down trending channel. It also is in wave 4 and forming a bear flag trading at the top of the channel. If this rolls over here, $42 and $37 would be the support areas
Semiconductors (SMH): The ETF formed a long consolidation coil building massive resistance at the $110 area. And with the markets has rolled over and broken the long term up trending channel line. It now is in a down trending channel and wave 4 has taken it to the top of the channel. Friday was a big reversal day for the ETF and could be the start of wave 5 to the down side. It might find support at $87. But the bottom of the channel comes in around $81.
As such, the major components of the indices (including the FAANG stocks) are all looking weak. We'll have a close look at them to give us insight on where the general market may be heading. The patterns are all very similar and emulate the general pattern of the indices right now (most are in wave 4 of a 5 wave pattern).
ADBE: Stock has finally broken to the down side of its long term up trending channel. It made a double top at $278 and broke the neck line at $257. It is now in a down trending channel. It needs to hold support at $232. Failing that and wave 3 cold take it to $220 or $210.
ALGN: Stock has dropped 50% in a month, coming from $400 to $200. First it broke its channel line and plunged $100. It then bear flagged, broke down then gapped down another $100. It is now bear flagging again. If it rolls over again $175 would be the target.
AMGN: Since May the stock was in a strong rising channel. But, with the market, it has also broken to the down side in a 4 wave move. Friday was a huge sell off for it and could be the start of wave 5. If wave 5 is truncated it could find support at $180. But below that and the stock could be heading for $165.
AMZN: Stock made a 3 wave move to the down side but had a huge capitulation day last week spiking down to $169 on huge volume. It then rallied for three days straight but on lighter volume. If this is wave 4 and the stock rolls over it could trade back down to 1470.
APPL appears to have made a head and shoulders pattern and on Friday gapped lower on earnings. It broke the neck line and found some support around $207. But through that level and we could see $196.
BIIB: The stock looks a little different the other major components in that it has just broken down from a major distribution base. The stock has broken below $330 support and is now bear flagging (wave 2). It is approaching the declining tops line and if it rolls over (wave 3) then it could test support at $285 and then $250.
BIDU: Chinese stocks did rally sharply late last week and internet stock BIDU was no exception. But again this could be wave 4 of a 5 wave move. On Friday it traded to lateral resistance at $209 and backed off sharply. If this rolls over, look for a trade to $172.
CELG: Stock has been in a large down trending channel since September 2017 coming from $140 area. In the last month, with the markets, it has sold off and looks to be in wave 4 of a 5 wave pattern. $66 would be the down side target for this stock.
FB: Stock continues to trade lower in the down trending channel. It is down over $20 from when I first turned negative on FB back in August/September. Look for it to continue to trade lower.
GOOG: Stock is in a declining channel much like the other FAANG stocks loosing over $200 from its high. It is at major support here touching down to the long term rising trend line. It did bounce of that level but found resistance at the declining tops line of the down channel. I would be surprised if this rolled over and retested the spike low of last week.
INTC: Stock continues to decline in a down trending channel. It is, currently, at the top of that channel. If markets come off look for INTC to trade to $41.
ISRG: Stock made a high of $582 and then rolled over and dropped sharply with the markets. It then formed a bear wedge (wave 2) and at the apex sold off sharply. I said to short at $500 and the stock dropped another $35 from there. It found support at $465 and rallied sharply to the declining tops line. If it rolls over here look for a move back down to $465 and even $452.
MSFT: After topping out at $116 the stock is coming off in an orderly down trending channel. It is, currently, at the top of the channel. If the markets should sell off look for Old Softy to trade to $97.
NFLX: After breaking out of its bear wedge formation in late September the stock sold off sharply and traded down to support at $270. It has bounced but backed off when it traded to the declining tops line. Look for NFLX to test the $270 area again.
NVDA: Stock appears to be one of the worst performers of the FAANG group coming off $120 in 3 weeks. It is a very steep drop but looks to be bouncing in wave 4. It will find lateral resistance at $225 and may $235. A roll over takes it back to $175 and if wave 5 continues lower then $150 is the next area of support.