We review the daily chart of the PowerShares QQQ Trust (QQQQ) that goes back to the all-time high at 55.07 hit on 10/31/07. The price pattern, the RSI momentum configuration, and the volume levels all suggest strongly that the Q's have unfinished business on the downside. In fact, all of the action off of the November 2008 low at 25.05 has the look of a sideways rest/digestion pattern, which when complete, should resolve itself in a plunge that breaks key near term support at 28.50, which in turn, has the potential to unleash a rapid decline that will retest the Nov. low. From an intermediate-term perspective, only a climb above 31.70 will invalidate the current potentially very negative pattern.



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.