Ominous formations in IWM AND QQQ

Posted on May 16, 2014 by in Featured Letters

 

http://stockcharts.com/h-sc/ui?s=IWM&p=D&yr=1&mn=0&dy=0&id=p42567425598&a=350518198

The most superficial examination of the IWM reveals  details with negative implications.  A two month downtrend is obvious and prices are approaching the horizontal trendline.  This trendline may well be the neckline of a mutant head and shoulders formation.  We have marked the head and shoulders (h-s-s).  Regardless of whether the formation is a head and shoulders or not it is  decidedly negative and worth a short if the horizontal line is taken out decisively.  Adding to the negative case is the breaking of the trendline from July13.  Always a screaming signal to the technician. We would put the stop about 2% above the last wavelet high.

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