Mish's Market Minute

Why is the Nasdaq 100 Fighting an Internal Battle?


The Nasdaq 100 (QQQ) continues to show a weak hand. Riddled with tech companies that are selling off, it has struggled to hold over its 50-day moving average at $381.02.

Having said that, the QQQ is one of the most important indices to watch right now, as its current support level is pivotal to the overall equity market's strength. This is because the Nasdaq 100 has had one of the strongest rallies through the pandemic and, therefore, if the QQQ continues to head lower, it could drag down other sectors with underlying weakness.

The Nasdaq's main support area is $379-381 from the recent low to the 50-DMA. Ever since the QQQ broke its neckline area from a head-and-shoulders chart pattern at $387.53, it has been very volatile. Now, QQQ has a fair amount of overhead resistance to get through because of this pattern.

First, it will need to clear back through the neckline area at 387, then through the shoulder line at $401.19. These resistance levels can be seen as a black line on the above chart. With that said, the resistance levels could be very tough to clear, as certain stocks within the index, like Netflix (NFLX), Zoom (ZM), Nvidia (NVDA) and more, have sustained large price drops recently.

While the index itself is holding, the internal struggle through heavy-weighted tech companies will need to battle their way back up. Therefore, keep these support and resistance levels in mind through this trading week; however, if the QQQ continues its internal struggle with large tech companies selling off, expect the index to stay choppy and potentially rangebound.

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On the latest edition of StockCharts TV's Mish's Market Minute, the market is miraculously finding some level of support despite the week's volatility. However, in case of a market bottom, Mish shares a multitude of trades to look at with good risk and great reward potential.

ETF Summary

  • S&P 500 (SPY): 449 support.
  • Russell 2000 (IWM): 212 support area.
  • Dow (DIA): Watch to clear and hold over the 50-DMA at 353.04.
  • Nasdaq (QQQ): 379 support from recent lows.
  • KRE (Regional Banks): Needs to clear and hold over 10-DMA at 71.84.
  • SMH (Semiconductors): Major pullback into support area. Needs to hold over 297.
  • IYT (Transportation): Will confirm a bullish phase with second close over the 50-DMA at 264.82.
  • IBB (Biotechnology): With its continued breakdown, it needs to find support.
  • XRT (Retail): 93.59 needs to clear.

Forrest Crist-Ruiz


Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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