The chart below is courtesy of KimbleChartingSolutions.com.
According to their analysis, two key areas – semiconductors and Nasdaq stocks – may be forming an inverse head and shoulder pattern. You can see Kimble’s “line in the sand” for SMH and NDX in Figure 1 below.
Figure 1 – Semiconductors and Nasdaq stocks potential warning signs (Courtesy: KimbleChartingSolutions.com)
(See also The (Semi) Official S&P 500 Index ‘Line in the Sand’)
The implication is pretty clear. If these two key sectors “give up the ghost” and drop below the necklines drawn in Figure 1, it could well serve as a major warning sign for the overall stock markets.
So stay focused.