Now that the FOMC has confirmed everyone's worst fears -- that the Fed will continue hike rates going forward -- of course the market stages its obligatory knee-jerk reaction.  In this case, an initial rally to new intraday recovery highs at 39.59 in the QQQQ. However, the rally did not hurdle the prior rally (congestion) peak at 39.61, which preserves the series of lower-lows and lower-highs that has been carved-out since the August 2 high of 40.14. If the Q's now sell off during the final hour of trading and break below 39.40, my micro work will argue that the recovery rally is over, and that the near-term downtrend has resumed to a target zone of 39.00, and then to 38.70/60. For now, we remain short.

MJP 8/9/05

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Mike Paulenoff is a 25-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his E-mini S&P and QQQQ technical analysis and trading alerts. For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary, or try his QQQ Trading Diary.