Don't Ignore This Chart!

The Other QQQ is Still Holding Up


The Nasdaq 100 ETF (QQQ) is one of the weakest of the major index ETFs right now because of several large-caps within the ETF. Note that Apple (-10%), Facebook (-6%), Google (-6.5%) and Microsoft (-8%) are all down sharply this month. Amazon (+2%) is the only one of the big five that is up.  The four losers account for around 35% of QQQ and AMZN accounts for 5.5%. Weakness in these four is clearly affecting QQQ as the ETF gapped down last week and broke below its mid April low with another gap on Wednesday. Despite short-term weakness, the recent decline puts the ETF as an important juncture as the 50-day and 200-day moving averages come into play. Taken with the late March low, I would mark a support zone in the 106-107 area and an important test is at hand. 

The weakness in QQQ is clearly a large-cap phenomenon because the Nasdaq 100 EW ETF (QQEW) is holding up much better. QQQ is down around 2% in April, but QQEW is flat and remains in a trading range. The chart shows Bollinger Bands in pink and the bands are the narrowest in six months. This means we have seen a volatility contraction and should expect a volatility expansion. The overall trend is still up and a break above the April highs would signal a continuation of this uptrend. I would mark support at 41.50 and watch this level for the first signs of a downside break. 

Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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