Bearish idea updates: IWM, XLF, BAC, JJC, JO, EEM,
I thought I’d update a variety of bearish charts that I’d noted in recent months. I am going to ignore the momentum plays like NFLX, FB, YELP, LNKD, etc. which have dropped 25%-plus. They have all broken down from rising wedge (or channel) patterns, and much money has already been made the shorts who had/have them. A decent proxy for their situation may be IWM, which is just now close to breaking the primary support from 2009 after falling from a smaller rising wedge.
Bank of American has very clearly broken down from the rising wedge pattern I first pointed out in March. The question is how much further it can fall. I don’t have any idea.
More interesting is XLF, which has not yet broken down but has a very similar pattern. It is both at the end of a rising wedge and facing a 50% retracement of the drop from 2007 highs to 2009 lows. For those looking to short something that hasn’t already moved down, XLF seems like an interesting prospect.
Copper (JJC) has been many years in forming a descending triangle pattern (or maybe a massive head and shouldesr?). It broke down a month ago, rallied back to the old support and is now close to confirming a breakdown. It has a little uptrend in recent weeks that is currently supporting. It will be interesting to see how this plays out, and how it relates the situation with China’s debt problems.
Coffee was a huge mover earlier this year, rallying 100%. It is now banging its head against the same resistance and showing wild volatility. It will be interesting to see whether coffee busts through or falls off. I imagine only the weather knows.
Lastly, emerging markets (EEM) are facing resistance.
A very similar pattern in reflected in the Brazil ETF (EWZ).