Might the QQQ Flip Dramatically Decrease? | The Conscious Investor

There is no such thing as a denying the power of the bullish major pattern for shares off the April low. The Nasdaq 100 index continues to make new all-time highs, closing slightly below $480 on Friday after gaining about 3.5% over the past week. However will this unbelievable uptrend proceed into July and August?

We have been monitoring loads of warning indicators, from the dramatic improve in bearish momentum alerts to an preliminary sign from the Hindenburg Omen in late Could. However, regardless of these bearish implications, the power of mega-cap progress shares, like Nvidia (NVDA) and Apple (AAPL), has been sufficient to drive the key fairness benchmarks increased. The query for buyers is whether or not the power in these main progress shares will likely be sufficient to maintain this bullish market pattern in place!

At this time, we’ll lay out 4 potential outcomes for the Nasdaq 100. As I share every of those 4 future paths, I am going to describe the market circumstances that may seemingly be concerned, and I am going to additionally share my estimated chance for every situation.

By the way in which, we carried out an identical train for the Nasdaq 100 again in February, and you will not imagine which situation really performed out!

And keep in mind, the purpose of this train is threefold:

1. Contemplate all 4 potential future paths for the index, take into consideration what would trigger every situation to unfold when it comes to the macro drivers, and assessment what alerts/patterns/indicators would verify the situation.
2. Resolve which situation you’re feeling is almost certainly, and why you suppose that is the case. Do not forget to drop me a remark and let me know your vote!
3. Take into consideration how every of the 4 situations would affect your present portfolio. How would you handle threat in every case? How and when would you’re taking motion to adapt to this new actuality?

Let’s begin with probably the most optimistic situation, involving the QQQ pushing above $500 over the subsequent six-to-eight weeks.

Possibility 1: The Very Bullish State of affairs

Essentially the most optimistic situation would imply the Nasdaq 100 continues its unbelievable tempo, pushing properly above the $500 stage by the tip of July. Not solely would main progress names proceed to thrive on this atmosphere, however different shares that haven’t been collaborating – corresponding to Vitality and Industrials – would seemingly rotate increased as a broader advance propels the QQQ to additional new all-time highs.

Dave’s Vote: 10%

Possibility 2: The Mildly Bullish State of affairs

What if the market stays elevated, however the tempo slows method down? This second situation would imply that the Magnificent 7 shares would stall a bit, and maybe different shares would rotate increased. The key benchmarks would stay in a major uptrend, however we might be speaking about management rotation because the market stays in a “wait and see” mode about potential Fed charge cuts later in 2024.

Dave’s vote: 25%

Possibility 3: The Mildly Bearish State of affairs

Each of the bearish situations would contain a pullback in main progress names, and if main names like NVDA start to retrace their good points from early 2024, we might face a mildly bearish situation. Breadth circumstances stay weak and, after the leaders begin to fail, there’s nowhere to go however decrease. In situation #3, I’d anticipate the Could low round $443 to carry for the QQQ, and this begins to really feel like a well-deserved pullback whereas the first uptrend nonetheless stays in place.

Dave’s vote: 60%

Possibility 4: The Tremendous Bearish State of affairs

You all the time have to have a brilliant bearish end result, which helps to place the opposite three into correct perspective. In situation 4, the management shares give again their latest good points, and maybe some robust financial information brings the entire “Fed Goldilocks situation” into query. The QQQ drops beneath its Could low, and by late July we’re debating whether or not the April low will maintain. Whereas the key fairness benchmarks nonetheless have constructive returns in 2024, this corrective transfer forces even probably the most optimistic of bulls to rethink their thesis.

Dave’s vote: 5%

What chances would you assign to every of those 4 situations? Try the video beneath, after which drop a remark with which situation you choose and why!

RR#6,

Dave

P.S. Able to improve your funding course of? Try my free behavioral investing course!

David Keller, CMT

Chief Market Strategist

StockCharts.com

Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary state of affairs, or with out consulting a monetary skilled.

The creator doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the creator and don’t in any method signify the views or opinions of some other particular person or entity.