UYG: Bearish Rising Wedge

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Off the 10AM low of 20.05, the UYG had a Bearish Rising Wedge rally to 20.95. Notice that there were three solid hits to the lower trendline prior to the final push to 20.95. The third tag is called a trendline validation. A bounce there is telling us, "Yes, that IS SUPPORT." When a validated trendline gets broken, as this one did at 20.52-20.53, it usually has some significance on the downside. There's no ALWAYS in the stock market.

When this trendline broke, the UYG dipped to 20.45, rallied back to a high of 20.52 in the next five minute bar, followed by a high of 20.53 in the next one, then failed. Former 20.52-20.53 support "should be" resistance on a retest. It was. That's a failed retest, and short-term, 20.52-20.53 now is validated resistance.

When a Bearish Rising Wedge is broken, as this one was, that suggests a retest of the bottom of the pattern, which was 20.05. The UYG sold off to 20.09. Targets are "what we're aiming for," so 20.09 is close enough. If the UYG now can hold the 20.05-20.09 Double Bottom, then take out 20.52.20.53 validated resistance, that would turn the short-term picture at least neutral. Much better if the UYG could break out of the Double Bottom, above today's high of 20.95.

NASDAQ - 2310 MADE

After breaking 2429-2430 support again, on Friday June 20, the 2310 target went back IN PLAY. The NASDAQ sold off Monday and Tuesday for a test of the neckline of the Inverse H&S AND the gap...

"Possible support above 2310 could be last week's 2388 low..."

Monday's close was 2385, so 2388 wasn't support...

"...and then the neckline and gap, from 2342-2357."

Tuesday's low was 2352. That DOUBLE SUPPORT was good enough for a rally to retest 2429-2430 broken support, which "should be resistance" on any rally. It was. On Fed day, the NASDAQ managed only to get to 2421.25, then the plug got pulled, as it were. Thursday was a gap down below Wednesday's 2376 low, THEN Tuesday's DOUBLE SUPPORT (neckline/gap low of 2352) got broken, and the 2310 target got MADE on Friday.

Friday's low of 2290.59 was at next support, the April 16th 2286-2291 gap, and the candle is a Bullish Doji Star Hammer. Only bullish with upside follow-thru. On any further selloff, next support is the low of the Right Shoulder (2266) and the neckline (purple), roughly 2269. Resistance is broken DOUBLE SUPPORT 2352, then the 2376 gap from Thursday.

SPX: Confirmation

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As far as confirmation is concerned, we don't always get it CLEARLY spelled out to us in the chart, but this time we did. In the SPX, for example, we got:

1. June 17 - (a) failure at the bottom of the Bull Flag (that wasn't bullish) telling us, "Yes, former support IS now resistance. (b) That candle also was Bearish Engulfing pattern; (c) that candle also was a Key Reversal Day. It made a "higher high," then CLOSED below the low of the prior session.

2. June 20 - a CLOSE below the neckline of the H&S Top

3. June 25 - a retest and failure of the broken neckline at the Fed announcement. The high was 1335.63 at 3PM, confirming, "Yes, that broken neckline IS resistance."

The SPX came off that resistance to 1322 into the close on Fed day, and we can see, technically, with the above bearish confirmations why the market was so vulnerable to the downside yesterday.

It wasn't ALL Goldman's fault (they put C and GM on their Conviction Sell List), but we'll go ahead and blame them anyway since they didn't help out any ;)

NASDAQ: 2310 IN PLAY

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From Sunday, June 22:

"UPDATE: The NASDAQ was looking good until Friday. Mid-week, it reestablished support at the Key 2429...2430 bottom of the Rectangle (pattern in black), but on Friday it broke decisively below it. That puts 2310 back IN PLAY."

The NASDAQ rallied out of the gate on Monday, but failed almost immediately at 2419, below 2429-2430 resistance. It sold off to a low on Tuesday, rallied to 2421 for a Double Top (2419-2421) after the Fed announcement on Wednesday, and has tanked 100 points from there to close the day out at 2321, just 11 point away from the 2310 target that is IN PLAY.

VPHM: Falling Wedge Target

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From June 5:

"Yesterday, June 4, VPHM broke out of its 10-month Ascending Triangle (pattern in green), so in addition to the 11.34 target that still is IN PLAY from the Falling Wedge breakout (pattern in blue) on April 1, that puts 13.26 IN PLAY."

The 11.34 target just MADE. "Take at least some profits when targets get MADE."

NASDAQ, SPX, UYG: Updates

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NASDAQ June 15:

"The NASDAQ closed back above broken 2429...2430...2429 support, so that puts the downside target of 2310 ON HOLD and puts the short-term trend Neutral. As we discussed on Friday, the Intermediate Term trend has remained bullish (the two Bullish Inverse H&S patterns in blue, and in purple)."

UPDATE: The NASDAQ was looking good until Friday. Mid-week, it reestablished support at the Key 2429...2430 bottom of the Rectangle (pattern in black), but on Friday it broke decisively below it. That puts 2310 back IN PLAY. Possible upport above 2310 could be last week's 2388 low, and then the neckline and gap, from 2342-2357.

SPX June 15:

"Bearish Rising Wedges frequently "morph," or change, into a Bearish H&S Top...
If we get a rally that is on low volume, that fails in the flag (pattern in green), or say, fails at the 50DMA (which has rolled over to the downside and now is at roughly 1353), then the neckline gets taken out to the downside, we'll likely test the March lows."

UPDATE: That's what we got, so far. A failed rally to the bottom of the broken flag (pattern in green) for a Right Shoulder, then a break of the neckline on Friday.


UYG June 15

"The weakest of the three charts. It came close to testing its March low; the other two are well above theirs."

UPDATE: In a bear market, weak charts are the most vulnerable, not the strong ones. The weakest of these three charts, UYG, closed at a new low on Friday. Anybody's guess whether it rallies or goes down some more. I let charts like this alone, and don't try to guess.

XLF And BAC

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Off the March 17 low, the XLF formed the same Bearish Rising Wedge that the UYG did. When it broke down, that suggested at least a move down to Data Point #3, at 24.40, and likely a retest of the low of the pattern (22.29), which we've gotten. The XLF now has the possiblity of 3-month Double Bottom, which looks much better than the January 22 "spike low" off the Fed Rate cut, and there's nice Symmetry to it as well. The rally off March 17 was 33 days; the selloff was 27 days. It has a nice "W"-Bottom look to it, another name for a Double Bottom.

If the Double Bottom doesn't hold, particularly if it's a Gap Down opening below that support, as was the case with BAC on June 4, I'd sell if I were long (I'm not at the moment). BAC currently is trying to rally back to broken support at the gap, and then has resistance at the bottom of the broken Symmetrical Triangle and the 50DMA (dotted green line), roughly 35-75 - 36.08. Meanwhile on the downside, 23.62 still is IN PLAY, a measured move off the Symmetrical Triangle breakdown.

UYG - 27.56 IN PLAY

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We got a breakout of the Ascending Triangle (basis this Hourly Chart) on Friday. When UYG was indicated to open down on LEH's earnings, I put in an order for 4,000 shares at 25.58 ( three cents above a 50% retracement of Friday's late day rally), and stopped it out at 26.63 after the pullback from 27.11 for a little more than a $4,000 gain. The rally was getting parabolic at the high and UYG looked like it needed to consolidate, which we got for the remainder of the session.

The second pattern (in orange) looks like a Bullish Continuation pattern. We're waiting for a Data point #4 (another low), then a push higher above the top of the pattern. If we make a "higher low" then break out above the #1...#3 trendline, that will be a Symmetrical Triangle. If we make a "lower low" at #4 then break out, that will be a Bull Flag. The high at #3 is is 26.91, so we want to see that get taken out to the upside.

NASDAQ, SPX, UYG

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Chart #1: NASDAQ:

The NASDAQ closed back above broken 2429...2430...2429 support, so that puts the downside target of 2310 ON HOLD and puts the short-term trend Neutral. As we discussed on Friday, the Intermediate Term trend has remained bullish (the two Bullish Inverse H&S patterns in blue, and in purple).

Resistance above here is:

1. 2460-2466 - That's the broken channel low, at Green #4, and the last rally high before 2429-2430 support broke, respectively.

2. 2505 (roughly) - That's where the bottom of the broken channel comes in on Monday, June 16

3. 2510 (roughly) - That's the 200DMA, and that's also where the bottom of the broken channel will come in on Tuesday, June 17, so it will be DOUBLE RESISTANCE.

Chart #2: SPX

When the Bearish Rising Wedge (purple) rally off the March 17 low broke to the downside on May 21, that put 1339.31 IN PLAY (50% retracement of the rally), and the break of of the Bull Flag (green) that WASN'T bullish put 1332.05 IN PLAY. Both of those targets MADE late last week.

Bearish Rising Wedges frequently "morph," or change, into a Bearish H&S Top. If that's the case here, the relatively horizontal black line is the neckline, and we're now going to have a counter trend rally to put in a Right Shoulder, and then later break down below that black neckline.

That scenario is an example of what analysts' mean when they say, "Let's watch the quality of the next rally." If we get a rally that is on low volume, that fails in the flag (pattern in green), or say, fails at the 50DMA (which has rolled over to the downside and now is at roughly 1353), then the neckline gets taken out to the downside, we'll likely test the March lows.

Chart #3: UYG

The weakest of the three charts. It came close to testing its March low; the other two are well above theirs.

After The Three Bears showed up (the three bearish patterns and breakdowns on the chart), UYG sold off 25%+ just from the point of the breakdown alone, at 32.66 on May 16. That's a huge decline in just one month's time, so at least a snapback rally is certainly reasonable. Possibly more than that.

In the intraday chart, we got an Ascending Triangle breakout on Friday that put 27.56 IN PLAY, which would be just below the last low of 27.76, prior to this last leg down, so there isn't much resistance between here and the target.

Next resistance is 28.47-28.48, the April 15 low and the May 28 low, respectively, the latter of which failed to hold after a poor attempt at a rally.

NASDAQ - 2429 - 2430 Resistance

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From June 11:

"Similar to that near EXACT failed retest of broken support, today the NASDAQ broke below 2429-2430-2429 TRIPLE horizontal support..."

Former support "should be" resistance on any rally and we can see from the intraday chart that it was. The NASDAQ penetrated 2429 - 2430 resistance by only two points, Double Topped at 2432, broke an Ascending Triangle, and down she went to the roughly 2406 target that the broken Ascending Triangle put IN PLAY.

Bigger picture, despite the lousy action off the Double Top at 2551-2550 and the break of 2429...2430...2420 Rectangle support (pattern in black) that put 2310 IN PLAY, we can see that the chart still looks bullish. We're at the top of the Cloud, an area that "should" act as support, and we're well above the necklines of the DOUBLE Bullish Inverse H&S breakouts.

Any close above 2429-2430, back inside The Rectangle, would put the 2310 target ON HOLD. That target would be CANCELLED if we take out 2550-2551, the top of The Rectangle.

On the downside, the 2310 target is against the bullish trend from the DOUBLE Bullish Inverse H&S breakout, so it's less likely that it will get MADE than if it were a target in concert with the trend. We've got several levels of possible support below here:

Support #1: 2361 (roughly)- the first down sloping neckline
Support #2: 2342-2352 - the Breakaway Gap
Support #3: 2327 - The Bottom of the Cloud (vertical green lines)

NASDAQ: 2429-2430 Support Broken

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From June 9;

"...The data point for the trendline for today on the chart should read June 9, not June 7. It comes in at 2476.94. If we close below that, we'll have Negative #2."

After breaking down to 2451 this morning, the NASDAQ rallied back to retest broken support and got to 2476.88, just 0.06 points below the broken trendline..."

Similar to that near EXACT failed retest of broken support, today the NASDAQ broke below 2429-2430-2429 TRIPLE horizontal support (horizontal black line on the daily chart) at 10:00AM this morning, rallied back to 2428.54 for a retest of broken support (see intraday chart), and failed. 2310 is IN PLAY as long as the NASDAQ trades below 2430.

NOTE: Daily Chart does not include today's trading.

NASDAQ: 2429-2430 Support Held

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From Yesterday Afternoon:

"The NASDAQ also has taken out 2460 support, and is challenging 2429-2430 horizontal support. The low thus far today is 2435."

The low on the day was 2429, right at horizontal support, and also at the 50DMA. Although the channel off the St. Paddy's Day low has been broken to the downside, the NASDAQ held important support. If 2429-2430 gets taken out to the downside, 2310 will be IN PLAY as long as the NASDAQ trades below that level.

NASDAQ: Broken Trendine

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From pre-market this morning:

"The close Friday was about 3 points above the validated up trendline off the St. Paddy's Day low. The data point for the trendline for today on the chart should read June 9, not June 7. It comes in at 2476.94. If we close below that, we'll have Negative #2."

After breaking down to 2451 this morning, the NASDAQ rallied back to retest broken support and got to 2476.88, just 0.06 points below the broken trendline, then it tanked. That sure doesn't look like a "random walk," does it? ;)

The NASDAQ also has taken out 2460 support, and is challenging 2429-2430 horizontal support. The low thus far today is 2435.

NASDAQ: At Trendline Support

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From June 6 comments:

"Despite how well the NASDAQ has acted, we always want to be looking the other way, in case it Double Tops here at 2551 and 2550. Negatives would be:

1. A close back inside the Symmetrical Triangle
2. A close below the channel (red), which is a validated trendline
3. A takeout of 2460 (Green #4)
4. A takeout of 2429 and 2430 (Green #2) horizontal support"

Rough day on Friday. The NASDAQ closed back below the Symmetrical Triangle, so that's Negative #1. The close Friday was about 3 points above the validated up trendline off the St. Paddy's Day low. The data point for the trendline for today on the chart should read June 9, not June 7. It comes in at 2476.94. If we close below that, we'll have Negative #2.

NASDAQ - Symmetrical Triangle Breakout

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After the 2538 target MADE off the first Bullish Inverse H&S (pattern in purple), the NASDAQ went down and validated the trendline off the St. Paddy's Day low, printing 2430, just one point above 2429 horizontal support from the May 9 low.

From there, the NASDAQ established data points #3 and #4 of a Symmetrical Triangle (pattern in green), and broke out of that to the upside yesterday, June 5, closing near the first target, the May 19 high of 2551.

The Symmetrical Triangle breakout also put 2639 IN PLAY, which is very near the 2630 target IN PLAY from the second Bullish Inverse H&S (pattern in blue). The 2630-2639 targets also would get the NASDAQ up toward the top of the channel (red).

Despite how well the NASDAQ has acted, we always want to be looking the other way, in case it Double Tops here at 2551 and 2550. Negatives would be:

1. A close back inside the Symmetrical Triangle
2. A close below the channel (red), which is a validated trendline
3. A takeout of 2460 (Green #4)
4. A takeout of 2429 and 2430 (Green #2) horizontal support

VPHM: Ascending Triangle Breakout

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From May 30:

"9.24 validated resistance was taken out on a closing basis (9.28) on May 29."

Nice rally off last week's channel breakout above 9.03, on May 27, and takeout of 9.24 resistance on May 30. Yesterday, June 4, VPHM broke out of its 10-month Ascending Triangle (pattern in green), so in addition to the 11.34 target that still is IN PLAY from the Falling Wedge breakout (pattern in blue) on April 1, that puts 13.26 IN PLAY.

FXI: Retesting The Neckline

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Lots of patterns in this chart. FXI currently is trading within the Bull Flag/Downward Sloping Channel, and retesting the neckline of the Bullish Inverse H&S breakout, which comes in today, June 3, at about 147.70. FXI currently is trading just below the neckline, at BID 146.85 ... ASK 146.90. The low of the Right Shoulder was put in on April 14, at 140.01. For the H&S breakout to remain bullish, that needs to hold.