Hi Reid,
I notice some interesting things on that chart.
I didn't draw any trendlines, but just eyeballing it, there was a trendline that formed from the January low extending upwards. You had pointed this out previously.
That trendline was broken rather convincingly with the Feb. 22 close. Since then it was tested from below repeatedly. Now there is a second, lower trendling roughly parallel to the first, which you drew in this chart.
So one interpretation is that we are essentially seeing two consecutive bear flags, which would make a break of that lower trendline likely within the next week.
Next test down would be the lower BB rail at $36.86 currently:
stockcharts.com[w,a]daclyyay[dc][pd20,2!b200][vc60][iLp14,3,3!Lyb20,2.0]&pref=G
That looks virtually certain to fall, given the acute BB contraction which is now 1.3. Below that I would place the next significant support at the 200 sma, currently at $36.45. As I have said before, I think this support will fail within the coming weeks. Below that is the support line you drew at the low point this year ($35.66), which is also the low point of this medium term correction of course. A break below that point would be very significant.
The regression channel is illuminating, I think:
139.142.147.218
Note that Friday's candle is a reversal candle at the upper rail, and that the lower rail just about coincides with the support line you drew at $35.66. So I think $35.66 is a likely reversal level.
I think it is too soon to tell, but right now I think the chances are about even that this level will also be breached to the downside. This will depend on how volume patterns materialize as this level is approached. If supportive volume builds, that will make $35.66 the most likely reversal point. If not, I think we will see that happen at $35.00---this is the final line in the sand, and bulls will stage an all-out counterattack here if that level is reached, and they will be successful.
Notice also that the relative strength of QQQQ compared to the S&P500 has steadily dropped over the last few months. This suggests to me that money flow has rotated out of tech and into blue chips. This conclusion is supported by the $SPX and $INDU charts, both of which began a correction at the same time as QQQQ, but that correction ended in late January. On Friday, both closed at the high of the year at resistance from the upper BB rail. I think QQQQ will follow suit, after trading down further, and rotation of blue chip money back into techs will partially fuel that rally, as the $SPX and $INDU consolidate or correct a bit:
$SPX:
stockcharts.com[w,a]daclyyay[dc][pd20,2!b200][vc60][iLp14,3,3!Lyb20,2.0]&pref=G
$INDU:
stockcharts.com[w,a]daclyyay[dc][pd20,2!b200][vc60][iLp14,3,3!Lyb20,2.0]&pref=G
Here are the comparative charts (QQQQ:$SPX and QQQQ:$INDU):
stockcharts.com[w,a]daclyyay[dc][pd20,2!b200][vc60][iLp14,3,3!Lyb20,2.0]&pref=G
stockcharts.com[w,a]daclyyay[dc][pd20,2!b200][vc60][iLp14,3,3!Lyb20,2.0]&pref=G
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