Sign InInvesco QQQ Trust Shows Strong Growth and Potential Overvaluation: Fundamental and Technical Analysis
Summary
Invesco QQQ Trust (QQQ) may experience a slight correction in the short term due to its overbought status, but is recommended as a Hold for current investors considering its strong performance, significant market size, and recent special rebalance announcement. However, new investors should wait for a pullback in price before entering. (July 18, 2023)
Fundamental Analysis
Invesco QQQ Trust (Ticker: QQQ) displayed a last close value of $385.74 on July 18, 2023, marking a 0.82% or $3.13 change. The Trust is listed on the NASDAQ. QQQ has shown substantial growth over the past year with a recorded year low of $254.26 versus its year high of $387.13.
The Trust's EPS (Earnings Per Share) value is recorded at $12.26, indicating its profitability. The Price to Earnings (PE) ratio is 31.45, suggesting QQQ shares may be overvalued, typically a sign of high growth expectations for the company by the market.
With an impressive Market Capitalization of approximately $151.63 billion and around 393.10 million Shares Outstanding, the Invesco QQQ Trust represents a significant player in the ETF market.
Technical Analysis
The trust has a high MACD (Moving Average Convergence Divergence) of 4.02 roughly over the last 3 months, indicating a bullish trend. The high RSI14 value of 85, however, signals that QQQ is potentially overbought and could experience some selling pressure in the short term.
Invesco QQQ Trust is trading well above both its 50 Day Moving Average ($352.17) and 200 Day Moving Average ($305.64). This is a positive sign as it indicates an upward trend. However, the high RSI does suggest a potential pullback.
The volume on the last trading day was 54.86 million, slightly above the average volume of 51.98 million, indicating a healthy market interest in QQQ.
News Impact and Analyst Forecasts
Recently published news highlights the popularity of ETFs, with the last week seeing an impressive $22.5 billion in capital inflow. Furthermore, the idea illustrated in the news about the potential exploitation of current market inefficiencies through an investment in quality software stocks might affect QQQ as a significant share of QQQ is invested in leading tech and software companies.
Analysts have a target high of $20 and a target low of $15, with a target consensus of $18.33 and a median of $20. While the targets are lower than the current price, these targets seem more directionally relevant to price percentage movements.
Prediction
Considering the technical and fundamental analysis combined with recent news and analyst forecasts, it's likely that QQQ's price may experience a slight correction within the next trading day due to its overbought status, then resume its upward trend in the following week.
Final Evaluation
Given the strong performance of QQQ, its significant size, current market interest, and the recently announced special rebalance, it's recommended to Hold the investment for current investors. However, new investors should wait for a slight pullback in price before entering due to the overbought condition indicated by the high RSI.
