Sign InInvesco QQQ Trust (QQQ) Shows Strong Growth Amidst Technical Indicators
Summary
Invesco QQQ Trust (QQQ) experienced a 1.18% increase in its closing price on September 11, 2023, and while there are indications of a possible correction in the near term, the overall trend remains bullish and it may sustain an uptrend in the coming week, with caution advised due to market volatility and potential bubble risk in the tech sector. (Date of analysis: September 11, 2023)
Fundamental Analysis
Invesco QQQ Trust (Ticker: QQQ), listed on NASDAQ, had a closing price of $376.97 on September 11, 2023, indicating a 1.18% increase. It has a substantial market cap of $148.19 billion, backed by a notable number of outstanding shares, which stand at 393.1 million.
The earnings per share (EPS) of QQQ are a healthy $12.26, and the price to earnings ratio (PE), reflective of on how much investors are willing to pay today for future growth anticipations, is 30.74. The PE ratio versus the industry average may indicate overvaluation, but can also be seen as a reflection of higher future earnings growth expectation by the market.
As for the 52-week range, QQQ has oscillated between $254.26 and $387.98. While this offers a broad view of the trading price, it is important to note that QQQ is currently trading closer to its 52-week high of $387.98, suggesting a robust momentum.
Technical Analysis
Looking at QQQ’s technicals, the 50-day moving average of $372.36 suggests an upward price trend, as the current price is above this figure. Similarly, the more long-term 200-day moving average stands at $324.34, being significantly below the current price, indicating a continued bullish outlook.
However, the Moving Average Convergence Divergence (MACD), a momentum oscillator, shows a reading of -1.05, hinting at a possible trend reversal. For further indication, the Relative Strength Index (RSI14) of 65 further denotes a pending correction, as it is nearing overbought conditions.
The Average True Range (ATR) of 1.40 is a volatility indicator that might hint at sizeable price fluctuations in the coming trading days.
In terms of trading strategy, the immediate resistance level is at $379.07, with support at $367.93. Reaching these limits could signify potential trend reversals.
News Analysis
Despite market concerns about economic numbers and inflation rates, there are a few promising factors. The NASDAQ continues to outperform in the overall market, for instance, the Invesco QQQ ETF and its lower-cost sibling Invesco NASDAQ 100 ETF soared 40% year-to-date, twice that of the broader S&P 500 Index based ETFs.
However, bubble risks should not be overlooked as mentioned in one of the news pieces. And considering QQQ holdings, Apple's performance significantly impacted ETF's last week trend.
Stock Prediction
Given current market conditions, indicators, and recent news, the price of QQQ may correct slightly in the next trading day, given the high RSI and negative MACD. However, considering its bullish moving averages and potential news linked to Apple’s iPhone 15 launch, QQQ could sustain an uptrend over the coming week.
Final Evaluation
In view of both technical and fundamental analysis, a small correction may occur, but the larger trend remains bullish. QQQ is classified as a 'Hold' for investors seeking long term appreciation, although caution is advised regarding market volatility and potential bubble risk in the tech sector. It could be a 'Buy' for new investors if it tests the support level successfully. However, for short-term traders looking for immediate profits, it may be a 'Sell', given the MACD and RSI indicators that suggest a slight near-term correction.
