So far the correction has proceeded as expected. On March 14 I showed the same chart below after support level #1 had be broken. See http://tradercraig.blogspot.com/2011/03/qqq-support-levels.html. Now support level #2 has been broken and the Qs are holding at support level #3 which is the November 2010 high. After retesting the line at #2, the Qs appear ready to break below the November 2010 high which should lead to a quick climax selloff toward the lower channel line at #4.
While I don't think that primary wave 3 is actually unfolding as many are presently calling for we have to be cognizant of the fact that if the lower channel line and the April 2010 highs are breached, then all bets are off with respect to a continuation of the rally. We also have to be on the lookout for a clear 5 wave impulse down on the daily charts which would signal a change in the trend as well.
At the moment, however, the most likely interpretation is that the market is in wave [c] down to complete a correction. At 2.618*wave [a], wave [c] would terminate at 50.74, which is just .09 above the April 2010 high and the maximum extension that we would expect for a [c] wave. Next week should give us plenty of insight, but for now there is no reason to believe that the cyclical bull market will not resume after the correction is over.