Invesco’s QQQ index ETF plunged, moving below its 200-day average. Concerns about the equity market increased. Fund, which tracks popular Nasdaq 100 Index, fell to $480 at its lowest level, almost 10% below the highest point this year. What’s next for blue-chip technology ETF?
Technical analysis of QQQ ETF
Daily chart showing the QQQ surged up to $540 record in February, and suffered an abrupt reversal down to $490. The chart formed a double top at $540 and now has retreated to below the neckline of $499. Double tops are one of the worst patterns to see in the stock market.
QQQ has fallen below $500, which was the support level that held the stock at its highest point in July 2024. It has also moved below the 200 day Weighted moving average (WMA), and now is attempting to reach the 200 day Weighted moving average (WMA).
WMA is a moving average that is more accurate because it concentrates on recent periods. A move below this level usually signals a market bearishness.
The Relative Viability Index (RVI), the Percentage Price Oscillator(PPO), as well as the Awesome Oscillator(PPO) all point downwards.
As sellers continue to target the Murrey Math Lines Point at $453, the index is likely to fall further. This price movement would indicate a 7.5% drop from current levels.
A move above $515, the critical resistance level in the market will invalidate any bearish hypothesis.
The Nasdaq 100 Index has Crashen
The Nasdaq 100 has been in a downward spiral for the last few weeks. There are 3 main causes. Donald Trump’s decision to implement tariffs on key allies such as Canada, Mexico and China is the first and most obvious explanation. The 25% tariffs are likely to cause significant challenges for individuals and companies.
Trump has not backed down, as he promised to implement reciprocal Tariffs in April. The tariffs are similar to the tariffs that other countries charge on US goods. Some tariffs could be reduced, but there’s a good chance that others would go up.
US GDP Growth Concerns
The QQQ ETF crashed in response to the continued concerns over the US economy. A model developed by the Atlanta Fed estimates that the US economy will shrink by 2.4% during the first quarter. The model is based on data collected by the Census Bureau and Bureau of Economic Analysis. It also uses the Institute of Supply Management, which measures the economy’s growth.
In theory, a weak economy is bullish for Nasdaq 100 because it indicates that the Federal Reserve must act to reduce interest rates. In fact, falling bond yields as well as the US dollar index indicate that analysts expect the Federal Reserve to deliver further cuts in this year.
This time, the risk is that inflation is still high and will cause an economic contraction. The headline Consumer Price Index (CPI), according to recent data, rose by 3% in the month of January.
Is the AI bubble about to burst?
Another major concern is the AI sector, which has been a key driver of US tech stock prices in recent years, is beginning to burst due to slowed growth. The fact that Chinese tech companies such as Tencent and Alibaba use cheap technology in order to create highly sophisticated AI models is a major concern.
This is why top AI stocks are starting to fall. Palantir’s stock price is down 35% since its peak this year. NVIDIA has fallen 26%. SoundHound, C3.ai and other smaller AI stocks have also fallen by double-digits. The market is likely to need a catalyst for it to keep doing well.
As updates occur, this post QQQ stock forecast will be updated.
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