Additional bearish views being voiced on the QQQQ's - which may be justified

For those following the blogs at Stockcharts.com, you may have seen this yesterday: QQQQ Retraces 38.2% - from the Don't Ignore This Chart! blog (5/21/09). This isn't the kind of bearish thought that would be a contrarian indicator. Therefore it tends to chalk another item on the skeptical or bearish side of what we're looking at in the equities markets now. The 38.2% retracement is a classic Fibonacci level of course, so having reached it can indicate either a pullback is due, or perhaps something even more bearish ... depends on the bigger picture analysis and one's interpretation of that. Notice also that this is not as measured from the October 2007 highs. Measurements from swing highs can also be very important. If the May 2008 highs can have been an Elliott Wave 2, and the drop from there into the November 2008 lows a wave 3, then one will be looking for wave 4 to complete and this could be one Fibonacci level for that to happen. Personally, I'm glad that others are also beginning to look at the intermediate swing highs of that time frame in 2008 (as indicated in Arthur Hill's chart, below). Readers here know that I also like the fact that the Nasdaq 100 (NDX) which is tracked by the QQQQ's also completed the standard Fibonacci parameters for an Elliott Wave flat at its high last month, and that index fell from it immediately has been weak since then. AllAllan at his blogspot has been considering the NDX to be tracing out a wave 4 (and Andre Gratian has maintained that outlook for the SPX as well), so I think I may be in good company by continuing to consider it possible that the next step for equities is a wave 5 to new lows instead of a pullback.

But of course, if it's just a pullback then we'll respect it. The market feels heavy either way. Below is Arthur Hill's chart, and you can read his comments at his blog (reference above):

Again, I used the Elliott Wave label for this post, although Tony Caldaro's OEW count measures out differently. We'll see what he says in his weekend update that may elaborate on his Thursday comments - it is possible now, that his OEW count may result in something that we'd consider consistent with a wave 5 down. As he put it, the possibility of his Wave C down to new lows being the next thing that manifests, should be enough to make all traders and investors WAKE UP and get prepared for that possibility!