As we speak, the Q's are pressing against their sharply rising 50 DMA (47.73), which if violated and sustained, likely will trigger additional weakness that projects prices into the 46.50 target area. HOWEVER, usually, a 4 day decline (off of the 6/05 recovery high at 50.61) will NOT be able to generate enough power to violate a sharply upward angled 50 DMA that has been gaining momentum for the past 10 weeks.

If anything, the first test of the DMA contains the weakness, and then, after an intervening rally, the next decline plunging through the MA. Having said that, my hourly pattern work is telling me to expect more intraday weakness into the 47.50 area, which indeed will be a break of the 50 DMA. But what matters is whether such a break down can sustain and close beneath the MA. Right now, that is the key consideration.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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