Believe it or not for the past week, the UltraShort QQQ ProShares (QID) ETF has been traversing a range between 54 and 52. Today’s decline in the major equity market ETF's triggered an inverse surge in the QID’s to 53.91, but so far the 54 resistance area has contained the weakness. Purely from a technical perspective the week-long pattern looks more like a sideways bearish-congestion area than a minor base from where a powerful upside reversal will emerge. In other words, right now my sense is that the decline from the March peaks at 58 is not yet complete – and that barring a hurdle of 54 we should expect another downleg to press the QIDs into the 51-50.50 target zone. In that the QID’s trade inversely to the major equity market ETFs, such a scenario will imply that the equity indices stage a potent rally despite today’s initial weakness. Based on the Q’s, such a rally has the potential to climb to the 44.70-45.20 target zone.



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.