14-day Premium Trial Subscription Try For FreeTry Free

Technical Analysis: Invesco QQQ Shows Upward Momentum with Resistance at $410.88

StockInvest.us, 1 month ago

StockInvest.us Technical Analysis

Invesco QQQ Trust (ticker: QQQ) closed its last trading session at $409.56 on January 12, 2024, showing a minimal uptrend with a 0.05% increase in value. The trading range for the day was between $408.15 and $411.25. Currently, the QQQ is hovering near its resistance level of $410.88 and not far off from the year high of $412.92. On the technical front, QQQ exhibits a bullish pattern when considering the 50-day and 200-day moving averages, with the former at $391.57 and the latter at $363.15, representing an upward trajectory overall.

The Relative Strength Index (RSI) currently stands at 53, suggesting a neutral position - neither significantly overbought nor oversold. Meanwhile, the Moving Average Convergence Divergence (MACD) is at 5.35, which could imply a bullish momentum in the short term. The Average True Range (ATR) at 1.17 points to a moderate level of volatility. With the next trading day being January 16, 2024, investors might observe continued resistance at the $410.88 level and watch for any breakouts above this mark, potentially indicating a sustained uptrend.

Fundamental Analysis

Regarding the fundamental aspects, QQQ holds a Price-to-Earnings (P/E) ratio of 33.4, which might be considered high relative to historical averages, signaling that it could be overvalued at its current price. The ETF shows earnings per share (EPS) of $12.26, which helps justify some of the valuation premium.

The ETF's market capitalization stands robust at $161 billion, with approximately 393.1 million shares outstanding. The recent news reveals that equity ETFs experienced their first weekly redemption in 15 weeks, suggesting a shift in investor sentiment that should be monitored. Furthermore, with the dividend yield at a modest 0.05%, QQQ is not typically favored for its income-generating capabilities but more for its growth potential.

QQQ News regarding the "Magnificent Seven" stocks that compose about 43% of QQQ's ETF structure lends credence to the idea that any movement in these stocks could substantially impact QQQ's performance.

It is also noteworthy that some analysts categorize QQQ as a hold with a cautionary note on the high valuation multiples, suggesting that new purchases at this level could bear the risk of negative returns should the market correct the overpricing.

Short-term Outlook

For the next trading day and upcoming week, the technical indicators combined with the current news may suggest a cautious approach. Pending any significant news, QQQ might face resistance near its current levels. The presence of a stop-loss at $395.12 provides investors with a defensive measure against potential downturns. Furthermore, the consolidation pattern mentioned in recent news may cap gains in the short term while the market determines its next meaningful move.

Overall Evaluation

Taking into account the technical and fundamental data along with relevant news, QQQ presents a mixed picture. The upward trajectory in moving averages and MACD favor bulls, but caution is advised considering the P/E ratio and the fundamental argument that the ETF may be approaching overvalued territory. Therefore, the evaluation for QQQ at this juncture would be a 'Hold'. Investors should continue to monitor the resistance level and news flow, which might affect sentiment and, consequently, the performance of the ETF. The neutral RSI is reflective of indecision, and investors are likely waiting for a catalyst that will determine the direction of the next significant move. The stop-loss provides a measure of downside protection, while the approaching ex-dividend date could slightly influence investor decisions as well.

Check full QQQ forecast and analysis here.