Why testing $39.82 remains a cue to clue us whether the QQQQ's continue in a "Q Continuum"

Will the QQQQ's continue on with their rally, and maybe even to new all-time highs? The "Q Continuum" is supposed to be a place/time in the Star Trek "Next Generation" series where beings called "the Q" reside and can make anything possible. So, I could point out that anything's possible and the QQQQ's may just continue marching on upward - no more dips or new lows! Let's take a look. The QQQQ's (ETF tracking the Nasdaq 100 index ($NDX)) didn't participate as well recently as the banking sector, energy-related sectors, transports (which might yet confirm the Dow Industrials for a Dow Theory buy signal - will see), and broader market indices. Today's high of 40.06 was actually lower than the QQQQ's intraday high on Thursday last week at 40.18. Will they trend reverse to go down, or break out to yet higher levels? The overall equities market strength is undeniable, but it's still worth revisiting some of the cautionary signs. One is that the QQQQ's are still toying about with the 39.82 level that I mentioned as the 50% retrace to the 2007 highs (see weekly chart, at bottom below). On the daily chart, there is a possible trendline that may either provide some resistance, or may guide further price rises to a shallower angle - it isn't a very common angle, but given two prior touches of it, can be worth keeping in mind. And then there's the Nasdaq volatility index ($VXN) which - like the VIX - remains at somewhat elevated levels. The VXN looks like it did get resistance at its prior swing low. Which reminds me - look at that weekly chart below again ... there's prior swing low resistance from March 2008 at the 40.81 level for the QQQQ's.

There's another point to consider - if the pattern traced out back when we were all looking at the (failed) H&S, could be interpreted as a triangle, then its measured-move target would be at 38.56. Obviously exceeded now, but that 38.56 level is close enough to these levels being worked now by the QQQQ's to consider in the mix.

The indicators are definitely strong, but the traditional RSI is showing overbought levels on the daily and getting close to that area on the weekly. In a bull market, that doesn't really matter; but in a bear market, it does. Which begs the question - is this still just a bear market rally? If so, then the Fibonacci retracement levels and other factors I've mentioned should be a concern.

What if the QQQQ's do pullback - what might targets be? The Bollinger Band midline on the daily is about 37.62, and that would be close to the lower trendline I marked on the daily chart. If below that, there's a gap fill level about 35.60. Of course, the 20 and 50 day moving averages, as well as the lower Bollinger Band and 200 day moving average, would be support levels to consider as well. Those should be considered before trying to think of something more bearish. Although the bearish point of view would be, the 50% level is a common one for a "B" wave so this could put the QQQQ's at risk of embarking on a "C" wave to new lows. Just gotta point that out, to remind us all that bearish possibilities cannot be ruled out from this point. Unless we're in a "QQQQ continuum" and the QQQQ's go into bull market mode, full speed ahead, no more dips and no more new lows!

Bottom line - this is an area for swing traders and position investors to continue keeping an eye on the QQQQ's, to see if this level turns into resistance.