• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock QQQ: Critical Levels to Watch as Nasdaq Teeters on the Edge
Stock

QQQ: Critical Levels to Watch as Nasdaq Teeters on the Edge

by August 6, 2024
by August 6, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Just Another Manic Monday? On Monday, the Nasdaq plunged over 3%. With the S&P 500 dropping a similar amount and the Dow plummeting over 1,000 points (a 2.6% drop), it was the biggest one-day drop since September 2022. Still, Japan’s Nikkei experienced a far more severe decline, plummeting by a staggering 12%; its worst downfall since the infamous Black Monday on Wall Street in 1987.

The main driver? Fears of a potential US recession sparked by the latest disappointing July jobs report. Adding to the worry is that the Federal Reserve may be a little too slow to cut interest rates.

Tech Rebound or Stock Market Mayhem?

The Magnificent Seven’s $714 wipeout Monday played a huge role in sinking the tech-heavy Nasdaq as it makes up over 40% of the Nasdaq 100. Adding to the chaos, a judge ruled against Google’s antitrust practices, and Berkshire Hathaway slashed its stake in Apple. 

As the Nasdaq and the broader market bounce back in early Tuesday trading, investors are eyeing the rally and wondering: is this the start of a comeback or just a brief pause before another slide?

To get a clearer picture of the Nasdaq’s price action, let’s zoom out and look at a weekly chart of the Nasdaq 100 Index ($NDX).

CHART 1. WEEKLY CHART OF THE NASDAQ 100. Despite the severity of Monday’s drop, the longer-term uptrend seems intact.

The range of Monday’s drop (see blue circle on the right) was far greater than most weekly ranges, and this was on a single day. 

But as you can see, the candle appears to have reversed the initial drop, bouncing off the 50-period simple moving average (SMA); the longer-term uptrend is intact.

But what if the Nasdaq were to drop further? Which levels might be prime buying opportunities, and which might scream “stay away”? Let’s switch to a daily chart of Invesco QQQ Trust ETF, a Nasdaq 100 proxy. 

CHART 2. DAILY CHART OF QQQ. Momentum is weak, but indications of potential support for further downside movement are clear.

You can see the QQQ bounced off the 200-day SMA, which aligns closely with the weekly chart’s bounce off the 50-period SMA. The uptrend appears undisturbed by the recent selloff.

Keep an eye on momentum via the Chaikin Money Flow (CMF); it’s still in the “selling pressure” zone. If it doesn’t turn around, the rebound might lack the momentum to sustain itself.

But if market sentiment and fundamental factors cause the QQQ to decline in the coming sessions, the range between $350 and $380 marks critical levels of potential support for the following reasons:

If the fundamental environment leans more bullish than bearish, the 50% to 61.8% Fibonacci retracement range constitutes an optimal entry point for those looking to buy the bounce.This range is a concentrated hotspot for trading activity, as shown by the Volume-by-Price indicator, and aligns with a strong support level near $350, tested four times during summer and fall 2023 (see black rectangle). A drop below $350 can lead to more downside. So, keep $350 in mind as the key level where any bullish outlook might need a rethink.

What Are Analysts Saying?

It’s mixed. 

JPMorgan: Think there’s a 50% chance of a recession. They expect the Fed to cut rates by 50 basis points in September and again in November (if not an earlier emergency cut).Morgan Stanley: Playing it safe, they note the market’s seasonal weakness and doubt a second-half recovery. They see lower equity valuations and a bearish outlook in the short term.Nomura: More upbeat than the rest, they see the “correction” as a buying opportunity as long as the Fed proceeds with rate cuts. Overall, they’re betting on the AI boom to continue fueling tech growth.UBS: They see the current Volatility Index (VIX) action as a signal for a potential buy, but they also warn that there may be more downside risk.

Closing Trade

After Monday’s market mayhem, the Nasdaq is trying to reverse its drop, but analysts’ forecasts are split. While price action suggests a bold upside rebound, momentum indicates weakness in the bounce. Ultimately, the Nasdaq’s direction will hinge on market sentiment and the Fed’s moves. If short-term weakness drags the QQQ lower, keep an eye on the key levels mentioned above.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • Leadership Rotation Could Confirm Corrective Phase
  • Bad News for Buyers Weighing Hefty Mortgage Rates
  • DP Trading Room: Finally! Signs of Life in the Energy Sector
  • Equity Markets Rebound As Discretionary Out-Performs
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Obama takes subtle swipe at Vance while praising Walz as ‘ideal’ Harris running mate
next post
Sandra Lee shares breaking point in split from Andrew Cuomo: ‘Every window and door closed’

You may also like

EQUITIES CLIMB OFF LOWS WITH A PUSH FROM AEROSPACE AS...

April 29, 2024

Size (matters) Over Style!

December 17, 2023

Will the Banking Sector Collapse Bring Down the Market?

March 11, 2023

Here’s Why The Bottom Is Dropping Out of the Dow...

January 11, 2025

Higher Gold Price Coming, But Investors Must Be Patient

January 30, 2024

Core PCE Data Has Powell Pleased – May Set Tone...

March 30, 2024

Gain AN EDGE Over Other Traders with ADX/DI

May 1, 2024

Is There “Blood in the Streets” for August 2023?

August 22, 2023

A Closer Look at Long Bonds and The US Dollar

October 10, 2023

S&P 500 Still Bullish: This Is What You Should Watch...

June 7, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters renovation

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025
    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,577 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,450 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters...

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    When to Pull the Trigger: Identifying...

    January 8, 2025

    SMCI Breaks $1,000 Level – What’s...

    February 15, 2024

    Stay Away From Large Cap Value...

    December 6, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here