As we speak, the QQQQ is pressing against their sharply rising 50-day moving average (47.73), which if violated and sustained, likely will trigger additional weakness that projects prices into the 46.50 target area. However, usually a 4-day decline (off of the June 5 recovery high at 50.61) will not be able to generate enough power to violate a sharply upward angled 50-day moving average that has been gaining momentum for the past 10 weeks. If anything, the first test of the moving average contains the weakness, and then, after an intervening rally, the next decline plunging through the moving average. Having said that, my hourly pattern work is telling me to expect more intraday weakness into the 47.50 area, which indeed will be a break of the 50-day moving average. But what matters is whether such a break down can sustain and close beneath the moving average. Right now, that is the key consideration.



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.