Will QQQ Retest All-Time Highs By Finish of April? | The Conscious Investor

After reaching an all-time round $540 in mid-February, the Nasdaq 100 ETF (QQQ) dropped nearly 14% to make a brand new swing low round $467.  With the S&P 500 and Nasdaq bouncing properly this week, traders are struggling to distinguish between a bearish dead-cat bounce and a bullish full restoration.  

There was no query that valuations had grow to be extremely wealthy going into the tip of 2024, so some kind of corrective transfer was broadly anticipated in Q1 2025.  However was the February to March drawdown sufficient to appease the valuation trolls and empower traders to purchase weak point to drive costs to additional all-time highs?

As we speak, we’ll lay out 4 potential outcomes for the Nasdaq 100 ETF (QQQ).  As I share every of those 4 future paths, I am going to describe the market situations that will probably be concerned, and I am going to additionally share my estimated chance for every state of affairs.  The aim of this instance of “probabilistic evaluation” is to broaden our pondering of what is potential, to interrupt down our preconceived market biases, and to open our minds to various factors of view.

Earlier than we accomplish that, I would like to revisit the final time we performed this train on the Nasdaq 100 again in December 2024.  

Going into early January it appeared that Situation 4, the Tremendous Bearish state of affairs, was matching very carefully with market motion.  However a really uneven month of January stored costs pretty steady, and by the tip of January the Nasdaq 100 was very near the tip of our Situation 3.

Again to the present market atmosphere, we’re pondering a Very Bullish Situation would imply the QQQ continues the present uptrend which finally turns into a full restoration to retest the February 2025 excessive.  Then again, if this week is absolutely extra of a lifeless cat bounce, then the Tremendous Bearish Situation may take us all the way in which right down to retest the August 2024 lows.

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 state of affairs to unfold when it comes to the macro drivers, and evaluate what indicators/patterns/indicators would verify the state of affairs.
2. Determine which state of affairs you are feeling is most probably, and why you assume that is the case. Remember to drop me a remark and let me know your vote!
3. Take into consideration how every of the 4 situations would influence your present portfolio. How would you handle threat in every case? How and when would you are taking motion to adapt to this new actuality?

Let’s begin with probably the most optimistic state of affairs, involving the QQQ persevering with this week’s rally to retest the latest all-time excessive.

Situation 1: The Very Bullish Situation

I’ve heard loads of calls that final week’s low was really “the” low and the underside is now in.  However for the Nasdaq 100 to get all the way in which again as much as $540 then we would wish to see a dramatic restoration within the Magazine 7 names.  And not using a rally from the mega cap development commerce, I do not assume it is even potential for this kind of bull part to play out.  Given the continued weak point in charts like META, I would say it is a low chance.

Dave’s Vote: 5%

Situation 2: The Mildly Bullish Situation

What if we do see a restoration in most sectors and themes exterior the Magazine 7 shares?  Situation 2 would imply the QQQ can solely rise up to round $200, as a result of with out the most important development names collaborating the uptrend has restricted momentum.  Breadth situations would undoubtedly enhance on this state of affairs, as shares thrive on an honest Q1 earnings season.

Dave’s vote: 20%

Situation 3: The Mildly Bearish Situation

The 2 bearish situations would imply that the latest upswing begins to show decrease as renewed fears of inflation, geopolitical threat, and a weak earnings season all weigh on threat property.  A mildly bearish state of affairs means maybe that we see some indicators of optimism as traders start to really feel extra conversant in the flurry of coverage selections from Washington.  And regardless that we’ve not gained a lot floor by the tip of April, it undoubtedly feels as if the bear part is restricted.

Dave’s vote: 30%

Situation 4: The Tremendous Bearish Situation

What if the flurry of coverage selections we have seen is simply an appetizer, and the principle course arrives in April?  Given the worldwide instability and financial considerations, it isn’t arduous to examine a state of affairs the place the February to March drop was the primary in a multi-wave decline that takes the QQQ again right down to the August 2024 lows.  This state of affairs looks as if the most probably end result based mostly on the breadth and momentum deteriorations we have been monitoring for months on our day by day market recap present.  

Dave’s vote: 45%

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

RR#6,

Dave

PS- 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 methods ought to by no means be used with out first assessing your personal private and monetary scenario, 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 approach characterize the views or opinions of every other particular person or entity.