Thus far, the Q's (QQQQ) have managed to plunge from the top of the coil pattern (44.50) to the bottom of the coil pattern (43.15). Apart from the volatility exhibited within the range, let's notice that for the past two weeks, rallies have failed at roughly the same price, which have created a horizontal top plateau at 44.50, which is juxtaposed against a series of rising lows. The vast majority of the time, a "flat top" versus "rising lows" resolves itself with the price structure pushing above the flat top. From a slightly long-term perspective, my pattern work continues to "warn" me that the initial upmove from the January 23 low at 41.62 to the february 1 high at 46.03 IS VERY SIGNIFICANT, AND REPRESENTS THE FIRST PART OF A LARGER RECOVERY PERIOD THAT WILL EMERGE PRIOR TO A RESUMPTION OF SUSTAINED WEAKNESS. In other words, all of the wicked rangebound action from the February 1 high at 46.03 to this moment (see light green demarcation lines) represents an "intervening" digestion period prior to another powerful recovery upleg. Based on my work, the question is how much deeper this decline presses prior to the emergence of the anticipated second upleg? We shall find out soon, I suspect.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.