Tuesday, June 20, 2006
$39.00 is the magic number for the QQQQ. This index is still struggling against its downtrend line, established from the drop, which started early May. If it can close near $39.00 then we might have a bottom in place. As of today however the downtrend is clearly locking in stocks and proving an entry point for sellers to reestablish their short positions. After a two-day rally last week, yesterday we saw what should be a resumption of the downtrend. Since the path of least resistance is down, it is best to position for more downside. Projections at this time show a retest of last week's lows and potentially a minimum of one more lower low before we will see significant support start to develop.