The PowerShares QQQ Trust (Nasdaq: QQQQ) are approaching important near-term support between 35.00 and 34.75, which must contain forthcoming selling pressure to avert sell signals that will point to a retest of the May low at 32.96 next. The ability of the QQQQ to hold above the 6/23 low at 34.77 will leave open the interpretation that all of the action off of the 6/11 high at 37.29 could be a correction of the May-June upleg (32.96-37.29) rather than a top formation.

If the bullish interpretation remains viable, and somehow the Q’s manage to claw their way back above this morning’s high at 35.60, I will get buy signals that the June 10-July 7 decline is complete and that another upleg is in progress that should revisit the 37.00/30 high area prior to the resumption of weakness.

Right now I am watching from the sidelines to see if the Q’s have established a significant near-term low. I will give the market one to three hours to make a run at 35.50/60 before making a decision about committing capital.

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