The PowerShares QQQ Trust (QQQQ) provide us with a very interesting price picture. What type of pattern is developing off of the May 7 high at 35.39 – a sideways bullish congestion area or a near-term top?

We don’t know just yet, but the morning’s inability to break below 33.00-32.96 support, followed by a powerful upside reversal, certainly suggests that the bulls are back in control and are pushing the QQQQ towards a test of critical near-term resistance between 35.00 and 35.40, which if hurdled should trigger upside continuation towards 36.20/50 thereafter. At this juncture, only a failure of the QQQQ to climb above 35.00 -- and a downside reversal from that level -- will once again morph the pattern into a potential top.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.