- Invesco QQQ Trust ETF experienced a steep pullback in August, but buyers returned and defended the August lows with conviction.
- The tech-heavy QQQ has outperformed the SPX since January 2023, stunning the bearish prognosticators. The doomsday predictions have yet to pan out.
- QQQ remains well above its 2022 lows even though the 10Y Treasury yield has surged to its October 2022 highs. Investors are likely looking past inflation rate headwinds.
- I argue why QQQ is well-poised to continue its upward recovery. Buyers who capitalized on the recent August lows should continue holding on to their positions.
This article discusses the performance of the Invesco QQQ Trust ETF (QQQ) and its outlook. Here are the key points:
- In August, QQQ experienced a significant pullback of nearly 9% from its July highs, primarily due to concerns in the technology sector. However, buyers returned strongly, defending the August lows.
- QQQ, which has a heavy focus on technology stocks, has outperformed the S&P 500 (SPX) since January 2023, defying bearish predictions.
- Despite a surge in the 10-year Treasury yield to levels last seen in October 2022, QQQ remains well above its lows from 2022, indicating that investors may be looking beyond inflation concerns.
- The article argues that QQQ is well-positioned for continued upward momentum, particularly for those who bought during the August lows.
- The author, JR Research, is an experienced investor specializing in high-growth stocks and economics.
- The article also notes that the battle between bullish and bearish sentiments is ongoing, and while QQQ’s August lows were well-supported, there is a significant resistance level at 388 that could impede further outperformance against the S&P 500.
- Caution is advised, especially for those who didn’t buy at the August lows, as chasing recent gains may be risky.
- The Federal Reserve’s policies, particularly regarding interest rates and inflation, are seen as influential factors. The article suggests that the Fed may maintain a rate pause, and this could benefit longer-duration bonds.
- Despite the 10-year Treasury yield reaching previous highs, both SPY and QQQ remain significantly above their 2022 lows, indicating investor confidence in the market’s ability to weather inflationary pressures.
- The article concludes that QQQ is likely to be driven by forward earnings estimates rather than yields, and the expected topping out of long-term yields should support QQQ’s upward recovery.
- Investors who bought at the August lows are encouraged to hold onto their positions, and the article upgrades its rating on QQQ to “Hold” (equivalent to Neutral or Market Perform).
The article emphasizes the need for investors to conduct their own research and exercise independent thinking when making investment decisions. The information provided in the article is not intended as financial advice or a specific timing recommendation.
