XING & QXM

(Click On Charts To Enlarge)

We discussed late last year, the significance of the validated up trendline in the Monthly Chart. We can connect any two highs or lows and call that a trendline, but we don't know if that trendline has any importance unless the market tests it and finds support or resistance there. We can see that in August and September, 2007, XING did find support at the up trendline (that became a validated trendline), double-bottomed in the daily chart, and took off for a re-test of the neckline of broken 10-Month H&S Top. That was a Bear Market rally (quick, and a nice percentage gain). XING failed to get back above the broken trendline, other than the two "Gaps To Crap." Those failures at the broken neckline validated it as resistance.

XING then broke the validated up trendline in the Monthly chart, tried to put in a Bullish Inverse H&S in the daily chart in January, 2008, but that failed, and XING broke decisively to the downside, and has continued down. Eyeballing the Monthly chart, since the up trendline support has broken, where might we look for next support?

Possible Support #1: 5.50 - the January, 2008 low

Possible Support #2: 4.95-5.06 - the mid-to-late 2005 lows were 5.00...5.00...5.02...5.06. In the daily chart, the failed Inverse H&S target that is IN PLAY is 4.95, "suggesting" a test of that 5.00-5.06 horizontal support area.

As far as QXM is concerned, on March 4 we knew...

"That close below the wedge "could be" a downside fakeout, but I don't like to guess, and I don't like to be long a trendline break like that, so I'll continue to watch QXM and see what develops."

We got a rally back inside the wedge on March 5, but then confirmation of the breakdown on March 6 and more downside follow/thru on March 7, closing at new lows. It's inadvisable to "catch a falling knife." Better to wait and let it bottom.