The break above $35.40 was not helpful. While one close above our breakdown point is not such a big deal, it certainly does not give me confidence that this level is a strong wall of resistance.
With the QQQQs, SPY, IWM and DIA not providing us a clear idea of where things are headed, I think the next step is to take a look at some of the major sector ETFs.
XLY is showing us a potential double top if this breaches $22.
EEM looks like it could be ready for a tumble if it breaks below $30.
GDX offered the shorting opportunity I discussed yesterday.
One would think with the market blasting higher today that the financials would run up big just like in March and April. Yet, for much of the day IAT was in the red. As I mentioned yesterday, I consider this one to already be broken.
Now, let’s look at what indexes still look ok.
Utilities (XLU) and Biotech (IBB) are still holding it together.
Perhaps today provided a good tell. If we’re just consolidating before a move higher, you would think today’s surge would have seen the bankings stock spike too. Where were they today?
So now I am back to DIA. It looks like DIA could be potentially forming the right shoulder of a head and shoulders pattern. I see similar action in many of the other indexes (including the QQQQs). With that said, I’m not going to get ahead of myself right here.
Let’s see if the sectors which look primed to fall such as XLY, EEM, GDX and IAT collapse. If they do, the other ones which are not quite primed will follow. If a H&S on DIA is forming, it would look like another 3-4 weeks of consolidation and chop would be in the cards before a drop.
So that is my plan. I’m waiting for confirmation of breakdowns on XLY, EEM, GDX and IAT. If it confirms, I’ll be shorting those and waiting for the rest to follow.
I got my breakdown on DRI today. I’ve been waiting patiently for this one to breakdown for 2 months now. Overlay DRI with the XLY chart and if this ends up rallying I don’t know what to say.