The markets fell sharply early in early trading today.  Fear of healthcare reform and options expiration playing a key role. The SPDR S&P 500 ETF (NYSE:SPY) lower by .6%, the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ) lower by .8% and SPDR Dow Jones Industrial Average ETF (NYSE:DIA) down .74%.

There is a beautiful in spirit of bear flag formation on the intra day charts of the indexes.  A bear flag or in spirit of bear flag forms when there is a sharp move down and a following move sideways to slightly higher.  In general, this pattern will move to the down side sharply in the coming candles, once fully formed.  This play has a high percentage chance of completing as long as volume remains solid.

The pattern today is in, no doubt about it.  However, the volume is getting very light in late trading which usually means it will either fail to complete fully or it will complete the following trading day when volume increases again.  This will be something very interesting to watch on the markets in late trading today and on Monday.  Watch double bottom support on the markets.  If that breaks, the pattern should fully complete.

This weekend could be a wild one.  With the healthcare vote and possible continued issues in Europe, the markets are nervous about next week.  Join the Research Center at InTheMoneyStocks to learn more about these amazing technical analysis techniques along with videos, calls, guidance and education.

Gareth Soloway
Chief Market Strategist