The stock market continues to pull back in the short-term. We still believe that the low for the mid-term downtrend in both QQQQ and IWM happened three weeks ago. SMH is right where it was at the beginning of March.

We have placed Fibonacci retracement lines on the chart of QQQQ from the beginning of the uptrend in the middle of March. The point is to measure the current pullback and see if it is consistent with a short-term pullback within a larger uptrend. Right now it is. A fall below the 61.8% retracement of 43 followed by a sustained break of the 42.90 area would suggest that the recent upmove has only been a correction within the larger downtrend that started at the end of February. On the other hand, a break of the 44.50 area to the upside would tell us that a new leg in the recent uptrend (from the middle of March) has started.

As we have stated for weeks, SMH is still in the same rectangle pattern it has been in for months. The 32.60 and 33 area are very powerful support and are right underneath the current price of the ETF. We believe this support will hold. A break of the 32.60 area should bring SMH to 32. If 33 and 32.60 do not hold, we feel strongly that 32 will. A break of 36 will put an end to the rectangle pattern that has formed for months now.

IWM has not broken the strong support line that once served as the resistance of the double bottom formation. Any additional weakness in the ETF should hold above this support area. A break of this area would bring IWM to 78 at a minimum and likely to the 77 area, suggesting that the bottom is not in.

We still believe that the mid-term uptrend started three weeks ago. By the end of the week we should have a clear idea as to whether or not the recent uptrend has been the start of a larger trend or only an upward correction within a larger downtrend.