Sign InInvesco QQQ Trust (QQQ) Faces Challenges Amid Market Volatility and Negative Sentiment
Summary
In September 2023, the Invesco QQQ Trust (QQQ) experienced its worst month, slumping more than 5.9%, due to pressure on the global technology sector caused by rising long-duration treasury yields and the Federal Reserve's commitment to higher interest rates, leading to a bearish trend and a potential trend reversal in the near term, with signs of a rebound in the short to medium term due to its oversold status, resulting in a 'Hold' status recommendation.
Fundamental Analysis
Invesco QQQ Trust (QQQ), an ETF listed on NASDAQ, has a market cap of $140.84 billion. This stock took a serious hit in recent times, reportedly experiencing its worst month in September 2023 as it slumped more than 5.9%. The global technology sector has been under intense pressure due to the rising long-duration treasury yields and the Federal Reserve's commitment to higher interest rates. JP Morgan CEO, Jamie Dimon, added to this negative sentiment by predicting a possible scenario of heightened interest rates and stagflation.
QQQ is traded at a PE ratio of 29.21 with 393.10 million outstanding shares and an EPS of USD 12.26. The company worked under a normal trading volume of 49.69 million shares, which jumped to 62.12 million amid recent developments. Despite its relative size and trading volume, negative sentiment surrounds the stock primarily due to the overall market condition and treasury yield changes.
Technical Analysis
The stock is currently experiencing a strong bearish trend. QQQ's Relative Strength Index (RSI) is at a low 26, signifying an oversold condition, a potential sign of a trend reversal in the near term. The Moving Average Convergence Divergence (MACD) of -0.77 also supports this view given its usual reputation as a lagging indicator that follows price action.
QQQ closed at USD 358.27 on September 29, 2023, near its day low of USD 357.02 and seems to be testing its support level of USD 358.13. Its highest price over the same day was USD 362.95, which is still considerably lower than its resistance level at USD 366.24. It should be noted that the stock is trading below both the 50-day Moving Average (USD 370.21) and the 200-day Moving Average (USD 329.92).
Future Predictions
Given these indicators and prevailing market conditions, the next trading day for QQQ on October 2, 2023, will likely be flat or bearish. The declines may continue throughout the upcoming week unless market sentiment changes or there is a significant catalyst to shift demand for the stock. However, the potential for a rebound in the short to medium term could emerge due to its oversold status.
Final Evaluation
The verdict for QQQ, under current market conditions and taking into account its recent performance, is a 'Hold.' Although QQQ is currently in a bearish trend, signs of a potential trend reversal are visible. Given the oversold position, market sentiment change can lead to an increase in demand for QQQ again. However, out of an abundance of caution due to continued market uncertainties and the broader economic outlook, a 'Hold' status is recommended until further market signals provide cues for more strategic action.
