In our last report, we mentioned that the QQQQ was testing the resistance near $45.50 and that it would be interesting to see whether the bulls would be able to send the price beyond this barrier. As you can see from the chart below, Monday's bounce off the resistance proved to the bulls that the $45.50 level was stronger than most orignally thought. Many technical traders used the move off the resistance to suggest a likely pullback toward the 100-day moving average, but nobody foresaw the type of decline that followed. Tuesday's massive move lower, sparked by the drop in Asia, sent the QQQQ below its 100 DMA and quickly erased all gains made by the bulls so far in 2007. Wednesday's attempt to recover the losses and push the QQQQ back above the 100 DMA proved unsuccessful and it will be interesting to see how the market reacts to the spiked volatility as traders discern the short-term direction of the index.