Invesco QQQ Trust (QQQ) Shows Bullish Trend But Faces Overbought Conditions, 1 month ago Technical Analysis of Invesco QQQ Trust (QQQ)

The Invesco QQQ Trust (QQQ), a popular ETF that tracks the NASDAQ-100 Index, closed the last trading day, December 26, 2023, at $410.88, marking a 0.61% increase from the prior day. This latest close was also a new year-high of $411.56, surpassing the previous low of $259.73, signaling a strong bullish trend. The trading volume was 22.08 million shares, lower than the 50.48 million average volume, indicating less trading activity on that day.

The ETF's technical indicators reveal a robust bullish trend but also suggest a potential for short-term overbought conditions. The Relative Strength Index (RSI14) stands at 79, above the overbought threshold of 70, which could indicate upcoming price consolidation or a possible pullback. In tandem with the RSI, the Moving Average Convergence Divergence (MACD) of 5.61 suggests strong upward price momentum in recent months.

The 50-day Moving Average at $379.93 and the 200-day Moving Average at $357.02 both plot below the current price, further confirming the uptrend. However, the Average True Range (ATR) stands at 1.11, pointing to moderate volatility in the daily price movement.

There is no immediate resistance level beyond the current year-high since it’s at an all-time peak. The ETF has established support at $364.70, a significant level of interest for potential buyers.

The anticipated next dividends on December 29, 2023, offer a yield of 0.20%, which could attract income-focused investors but may not be a strong incentive for growth-focused investors due to the relatively low yield.

Fundamental Analysis of Invesco QQQ Trust (QQQ)

QQQ Fundamentally, the ETF's Price-to-Earnings (PE) ratio stands at 33.5, reflecting a premium compared to the broader market, which is justified by the high growth potential of the tech-heavy NASDAQ-100. The Earnings Per Share (EPS) is in a healthy state at $12.26.

Recent news indicates significant optimism about the performance of the QQQ, with analysts highlighting a 78% average return from top picks and expressing bullish sentiment for 2024. The concerns over high market valuations seem balanced against the positive backdrop of potentially falling inflation and reducing interest rates, contributing to a cautious yet optimistic outlook.

A recently launched Nasdaq-100 fund threatens QQQ by offering a similar investment product with lower fees, suggesting that QQQ may face increased competition for investor capital.

Furthermore, the broader picture showcases a positive environment for buybacks, which could benefit many of the firms held within QQQ, enhancing shareholder value, and potentially sustaining upward price momentum.

Predictions for Upcoming Trades and Evaluation

For the next trading day on December 27, 2023, given the overbought technical conditions, a slight pullback or consolidation could occur, barring significant news developments that could drive momentum. Over the upcoming week, the trend may continue to be positive, with caution warranted due to the probability of a corrective price movement in response to the overbought RSI readings.

Overall Evaluation

Considering the technical and fundamental aspects, alongside the recent news, the evaluation for Invesco QQQ Trust (QQQ) is categorized as 'Hold.' While there are strong bullish signs in the upward trend and promising fundamental indicators, the overbought technical conditions, increased competition from similar products, and the upcoming dividend event suggest a period of price stabilization might be near. Investors should be cautious of short-term volatility and consider the long-term growth prospects of the Nasdaq-100 companies QQQ holds before initiating any new positions.

Check full QQQ forecast and analysis here.