Dec 22

Nasdaq at Start of Downside Correction

by Mike Paulenoff, Fri December 22nd, 2006

The QID chart is warning us that the Q's may be in the early stages of a very significant downside correction. From a strictly technical perspective the QID has broken out to new 5 week recovery highs from within the base pattern that has developed between (roughly) 50.70 and 54.20. While the QID has not shown any significant upside follow-through yet, as long as the price remains above 54 on a closing basis we should consider today's action as a bonafide breakout and reversal of the near-term trend -- that projects next to 56 on the way to 58. However, should today's spike to 54.56 reverse and close below 54, my near-term technical work will be in a gray area, while a close below 53.60 will argue that today's early strength represented nothing more than a stop-triggering bull trap. This will be our last Mid-Day Minute until after January 2, as we are on vacation next week. Happy Holidays and New Year.
Chart

Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!