Hi Shoppers,

If you’ve been reading Profits in Pumps, you know I have been writing about the cup and handle formation since January 15th.

We are now right at the top of the cup, where the resistance level is and causes a pullback or consolidation period.

That resistance level in the S&P 500 (TIcker: SPX) is $4080:

As you can see, it traded above $4080 but could not close above it.

Remember the closing price is far more important than the intraday prices.

This consolidation period could take SPX back to that long standing downtrend line at $4025 or it could come back down to the 200 day moving average at $3956.

The pullback, as a general rule, should stay around one third of the cup which comes in at $3970.

Looking a the Invesco QQQ Trust (Ticker: QQQ) chart, the resistance comes in at $296:

Again, it traded above there intraday but could not close above it.

QQQ did trade through some formidable resistance where that downtrend line, that goes back to August 16th, converges with the 200 day moving average.

This would be a key area for the QQQ pullback.

As you know … old resistance is new support.

Mark Sebastian and I both feel that the IShares Russell 2000 Index (TIcker: IWM) has led the entire market higher.

It has actually closed above the resistance level:

Going back on the chart, it is possible that the resistance comes in at $189.70, which is just above here.

A third of the difference between the bottom of the cup and the top of the cup is six points, taking the IWM down to $183.

So far, I have been right on the cup and handle formation.

Time will tell us if it pans out entirely.

Trade Review

Exxon Mobile (Ticker: XOM) did not trade higher on Friday, so no trade was made.

I will be keeping it on my watchlist.

Thanks for Reading … See You Next Tuesday,