It’s gap fill time in the US, as you can see by the following charts that this man who stares at charts presents for you today. Personally, I have done well with story/growth stocks this year but have taken a beating lately, trying to bottom feed new positions. Turns out their bottoms were significantly lower still. Regardless, all trading – long and short – has been done against a very high cash equivalents position that pays income. In other words, we are and have been in a high risk market for all of 2018.
So my plan now is to trade what I see best in the charts and what I see best exists in index ETFs like SPY, which retains a short-term bounce pattern as it fills last week’s gap. It still has a gap down below 268 but what I am interested in at the moment is the current gap fill and test of the SMA 200. Even more than that I am interested in the symmetry of the short-term pattern which, if real, is putting in a right side inverted shoulder to match the one from early October.
My short-term view on SPY is slightly to the bullish side but longer-term bearish. Bulls need to bounce it here or it’s going to get hairy. Sure, it can drop below 268 and fill that lower gap, but that would wreck the pattern symmetry.
SPY’s leader is QQQ. Tech leadership has been rolling over as we’ve reviewed each week in NFTRH and occasionally here at the public site. As such, QQQ is weaker and its pattern more suspect. It filled the upper gap last week and is going for the lower one day. It is absolutely critical for this market that QQQ – and all that over-hyped FANG type crap – bounce soon…
…or the bull case is going to go right down the crapper with the leader’s leader (our leadership progression is Semi→Tech→SPX), the Semi sector. There goes the symmetry of this pattern as it fills its lower gap.
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