QQQQ Trend Analysis - 6/16/2006

QQQQ made a lower low on Tuesday and then rallied. Wow! What a spectacular rally - 4.2% (from 37.16 to 38.79) in two days. Now you can see the power of the double support (weekly and monthly trend support lines). That is exactly what we meant last week saying that "QQQQ may have short-term rally from 37.0 - 37.5 support area."

Long term perspective: Our long-term perspective has not change much. Back in May we suggested that QQQQ trend presents a long-term channel started in mid 2003. QQQQ chart reached the resistance level on January 11, 2006 and turned down toward the support line. This move was completed on Tuesday, June 13. The new rally started from a long-term support trend line. Some technical indicators and trend analysis suggest that long-term uptrend might be over and the long-term support line might me broken soon. Another possible scenario may suggest that the long-term channel is still valid and QQQQ will move up till resistance line makes a new high. For both scenarios we expect the current rally to be short and QQQQ to retest the support line.

Short term perspective: Based on our long-term perspective we expect the current rally to be short and QQQQ move down to retest the long-term support line. As we suggested last week QQQQ most likely will continue to oscillate along the short-term downtrend support or the resistance line.