Based on the pattern carved-out during the decline from last Monday’s high at 45.47 to yesterday’s low at 43.51, and from the behavior of the underlying hourly momentum oscillators, the Q’s likely completed a downleg at 43.51 – and now should embark on a recovery rally period that should propel the Q’s back up to the 44.10/40 target zone in the upcoming hours (perhaps in reaction to the State of the Union message).  More than anything else, however, the quality and quantity of this rally will tell us if the Q’s started a major intermediate-term correction or if they ended a relatively minor pullback within the still-viable July-January uptrend.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.