• 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
  • Contrarian Trading Strategy: Scanning For Stocks to Fade
  • Inspire Soaring Profits: A Unique View For Success
  • Equities Remain in “Go” Trend as We See Rotation into Utilities
  • DP Trading Room: MUST SEE GOLD CHARTS!
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

2024’s Big Bang: A Deeper Dive Into the Hindenburg Omen

December 20, 2024

BUY Signals Continue to Diminish

February 16, 2024

Bitcoin Blasts ABOVE 70K!

May 21, 2024

Seasonality Suggests a Massive Energy Market Shift This Summer—Are You...

June 18, 2024

Last Week’s Pullback is a Buying Opportunity!

October 11, 2024

Tickers Still Bullish

March 24, 2023

DP Trading Room: Negative Divergences Explained

March 28, 2023

Stay Ahead of the Markets with AUTOMATED Portfolio Reports

April 13, 2024

Finding the Leaders after a Sharp Decline – with Video...

September 26, 2023

Master Momentum Using Price Swings and Fibonacci Grids

February 8, 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

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

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

      June 27, 2024 2,630 views
    • 2

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

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

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

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

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

      June 27, 2024
    • 2

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

      August 9, 2024
    • 3

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

      June 25, 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

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    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

    DP Trading Room: Deflation…a Possibility?

    July 1, 2024

    Evaluating Risk is a Key Difference...

    February 25, 2024

    DP Trading Room: Gold Hits Another...

    February 10, 2025
    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