With AAPL, GOOG, PALM, AMZN, MSFT, INTC, CSCO acting relatively well today, the NDX is outperforming the Dow and the SPX. Let's take a look at the pattern that has been carved out by the PowerShares QQQ Trust (Nasdaq: QQQQ).

The Nasdaq indices are acting considerably stronger than the S&P indices. In addition, let’s notice that the recent weakness in the Q’s (a derivative of the NDX) managed to hold support right at its March-June up trendline and has pivoted to the upside from the test of the trendline. As long as the trendline remains viable, we will remain long the Q’s in our model portfolio looking for a rally that revisits last week’s high area at 37.00/30. However, upon a violation of the trendline at 35.35, we will stop ourselves into a short position for what should be a significant bout of long liquidation that has potential to press the Q’s to 34.00-33.50.

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