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Small & Mid Caps Break Down, Large Caps On Deck

Both the small caps (IWM) have already broken below their primary uptrend lines off the early 2016 lows along with the mid caps (MDY). While both closed at support yesterday, IWM appears to be headed down to at least the 133.50 area with MDY poised to fall to at least the 305.35 area once the support levels just below give way (likely soon). Props to member @irawood for pointing out those trendline breaks in the trading room as I have been largely focused on the large caps lately, particularly the Nasdaq 100 (QQQ).

Unlike the small & mid caps, both the Nasdaq 100 (QQQ) & the S&P 500 (SPY) large cap indexes are is still trading right off their highs & have yet to break down below their primary uptrend lines (white) or even the minor uptrend line (yellow) on SPY, although a break below both appear likely in the coming weeks.

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Aug 10, 2017 9:10am|Categories: Equity Market Analysis|Tags: , , , , , , , |3 Comments

3 Comments

  1. rsotc August 10, 2017 9:55 am at 9:55 am

    QQQ once again testing the bottom of the trading range that has been recently highlighted on the 60-min time frame (143 area). Based on how many test of that level we’ve had so far coupled with the divergent high that proceeded it, my guess would be that this will be the final test before the Q’s break that support & go on to make a fairly sharp thrust lower.

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  2. raghev August 10, 2017 10:12 am at 10:12 am

    The million dollar question then become is when should we BTFD? Last experience was that we were all waiting for the dip to 132 and we missed the hell out of the push up to 145 from 136. 9 dollars in total.

    Should we be buying the dip at 140 or wait till 136 or wait till 132. That’s the million dollar question.

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    • rsotc August 10, 2017 1:09 pm at 1:09 pm

      Ideally, I like to wait for prices to fall to support with positive divergences on the 60-minute charts & even better, with some type of bullish reversal pattern forming. Ditto for going short but in reverse (60-minute negative divergence, bearish rising wedge, candlestick and/or price volume confirmation, etc…).

      QQQ, SPY, IWM, etc.. have all just put in some very clear & sizable divergent tops on the 60-minute charts but also (much) more importantly, the daily charts as well & It appears to me that they are only just be starting to manifest in the form of the expected trend reversal/correction.

      I am acutely aware that since US presidential elections in Nov that bearish technical breakdowns, patterns, divergences, etc.. didn’t play out to the full extent that the charts had indicated but that doesn’t mean TA has stopped working & never will again. As of now I expect more downside to at least those level that I posted on the front page earlier today. If something in the charts changes, I’ll do my best to recognize it & share my thoughts.

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