- Technical Commentary -

January 27, 2010 (FinancialWire) (By Frank Kollar) — Shares of Internet HOLDRS (NYSE: HHH) made a strong comeback from intra-day lows on Tuesday, January 26, but more declines are likely in coming weeks.

Internet HOLDRS may have made a solid comeback on Tuesday, closing with a gain of .03 cents after steep intra-day losses, but after breaking the 50-day moving average several days ago, and  now with a very bearish MACD, it will likely decline to the next support level before there is any chance of a bullish reversal.

Internet HOLDRS has support at the 50% retracement of the July 8 to December 28 advance. This support is at $50.06, some 8.7% lower that Tuesday’s January 26 close.

If this level is broken, the next support is at the 61.8% retracement at $47.70, 12.8% lower. This is a critical support level so if Internet HOLDRS closes below it, a new analysis will be issued as there will likely be substantial declines following such a break of support.

A bullish reversal day at or near either of these two support levels would offer a low risk entry point for a bullish trade, using the support level as a sell stop.

The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy holds a position in Internet HOLDRS.

Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market, his bearish positions resulted in gains exceeding 100 percent, all achieved by trading trends.

Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.

Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

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