The Invesco QQQ
Trust ETF (QQQ) represents the stocks in the Nasdaq 100. The daily chart for this ETF shows a negative moving average crossover at the beginning of March 2022. This ‘death cross’ occurred when the 50-day simple moving average declined below the 200-day simple moving average. When this happens, the ETF has downside risk.
QQQ declined from its 200-day SMA at $368.51 on March 29, 2022 to as low as $254.13 on October 13, 2022. This low was confirmed on March 14, 2023 with the formation of a ‘golden cross’. This is when the 50-day SMA rose above the 200-day SMA. The ETF then began the bull market rise from $297.21 to the high of $429.85 set on January 24, 2024. This reached my annual risky level at $429.79. This is when it was time to reduce holdings.
The Daily Chart for QQQ
Courtesy of Refinitiv XENITH
The daily chart for QQQ goes back two years. At the far left side of the chart you can see the ‘death cross’ set on March 1, 2022. This began the decline from the 200-day simple moving average at $368.51 on March 29, 2022 to the low of $254.13 set on October 13, 2022.
On March 14, 2023 the 50-day simple moving average (in blue) rose above the 200-day simple moving average (in green). This buy signal is called a ‘golden cross’. This began the rally from $297.21 to the annual risky level at $429.79 on January 24, 2024.
The horizontal line at the top of the chart is the annual risky level at $429.79. The horizontal line near the bottom of the chart is the quarterly value level at $278.55.
Above the chart and not shown is the semiannual risky level at $435.98.
The Weekly Chart for QQQ
Courtesy of Refinitiv XENITH
The weekly chart for QQQ is positive and extremely overbought. The ETF is above its five-week modified moving average at $410.13. It’s also well above the 200-week simple moving average, or ‘reversion to the mean’ at $324.52.
The 12x3x3 weekly slow stochastic reading is extremely overbought at 92.81. This measure scales between 00.00 and 100.00 where readings above 80.00 are overbought and readings below 20.00 are oversold. The reading of 95.73 is above 90.00 which I consider a parabolic bubble.
Trading Strategy: If you are long QQQ, reduce holdings by 50%. If you want to buy QQQ, wait for weakness to its 200-day simple moving average at $369.18, and to its ‘reversion to the mean’ at $324.52.