Fact: The long-term trend for tech remains up and the decline into the lows on Christmas Eve DID NOT break this trend.
This chart looks at NDX 100 ETF (NASDAQ:QQQ) on a weekly basis over the past 14 years. For the last decade and since the lows in late 2009, QQQ has remained inside of rising channel (1). As you can see, the decline into the end-of-the-year lows did nothing more than test support, which held and was followed by a strong rally.
During the last few months, QQQ may have been forming a head-and-shoulders topping pattern. It’s possible the 8-week rally off of 10-year rising support is forming a right shoulder.
The question is, is a giant a topping pattern in play? QQQ would need to break the neckline and rising channel support at (3) to prove that an important topping pattern has been completed.
What would prove this pattern is a bust? Nothing more than a rally above the left-shoulder highs and a break above last year's highs.