SMH, TAN, XLE updates 02/13

SMH: ETF that tracks the SOX (semiconductors). Counts best as having completed blue primary III off the low made in 2009. Looking for a low in the $88-$76 region, which means we’ll see a bounce and lower low. There’s good support at $88 I must say, less so at $76. This count suggest the SPX will follow the same path: bounce, lower low and that indeed major-4 and 5 are wrapping up this Bull soon, which are Primary III and IV for the SOX. But that’s a story for another time as it will take many more months and nothing we should be worried about yet.

SMH monthly

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TAN: is an ETF that tracks the basket of individual solar-company stocks. I prefer the yellow major-1, 2, 3, 4 count for Primary C of cycle 2. As the decline of “4?” looks impulsive as well (red intermediate-i, ii, iii, iv). I see no reason to long this ETF until it breaks above $50, arguable $31.77 the “i” low. Why? As that will mean the impulse down to lower prices is invalidated. A break below $16.45 will mean intermediate-v is confirmed. A break below $12.60 will ideally target $4-$6 for all of Cycle 2.

TAN monthly

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XLE: WOW talk about a total rejection at (long-term) resistance. In last month’s update (see here) I was looking for possible $95 on a break above that resistance, where price then resided at. That clearly didn’t happen and instead price broke down hard and fast. The advance off the yellow major-b low is clearly 3 waves and I prefer to count blue Primary B as complete. Of course major-c can still subdivide but the past 2 weeks look much more like an impulse down than anything else. This means the dominant direction is down. A break below “b” and especially below blue Primary “A”, will confirm price is heading for possible as low as $27 (C=A). I see no reason to long XLE unless it breaks above $78 for a run to $95. Anybody who was long XLE should have had their (trailing) stops or regular stops have hit the past 2 weeks to protect profits or minimize losses. For now this is IMHO a “don’t touch” type of environment as there’s no clear edge.

XLE