Will QQQ Retest All-Time Highs By Finish of April? | The Aware 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, buyers are struggling to distinguish between a bearish dead-cat bounce and a bullish full restoration.

There was no query that valuations had change into extremely wealthy going into the top of 2024, so some form of corrective transfer was extensively anticipated in Q1 2025. However was the February to March drawdown sufficient to appease the valuation trolls and empower buyers to purchase weak spot to drive costs to additional all-time highs? Right this moment, we’ll lay out 4 potential outcomes for the Nasdaq 100 ETF (QQQ).

As I share every of those 4 future paths, I will describe the market situations that will probably be concerned, and I will additionally share my estimated likelihood for every situation. The purpose of this instance of “probabilistic evaluation” is to broaden our considering of what is doable, to interrupt down our preconceived market biases, and to open our minds to different factors of view.

Earlier than we accomplish that, although, I might like to revisit the final time we carried out this train on the Nasdaq 100 again in December 2024.

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

Again to the present market setting, we’re considering a Very Bullish Situation would imply the QQQ continues the present uptrend, which ultimately turns into a full restoration to retest the February 2025 excessive. Alternatively, if this week is absolutely extra of a useless cat bounce, then the Tremendous Bearish Situation might 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. Think about all 4 potential future paths for the index, take into consideration what would trigger every situation to unfold by way of the macro drivers, and evaluation what indicators/patterns/indicators would affirm the situation.
2. Resolve which situation you are feeling is most certainly, and why you suppose 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 eventualities would affect your present portfolio. How would you handle danger 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 situation, 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, we would want to see a dramatic restoration within the Magazine 7 names. And not using a rally from the mega-cap progress commerce, I do not suppose it is even doable for this form of bull section to play out.  Given the continued weak spot in charts like META, I might say this can be a low likelihood.

Dave’s Vote: 5%

Situation 2: The Mildly Bullish Situation

What if we do see a restoration in most sectors and themes outdoors the Magazine 7 shares? Situation 2 would imply the QQQ can solely stand up to round $200, as a result of with out the largest progress names taking part the uptrend has restricted momentum. Breadth situations would undoubtedly enhance on this situation, as shares thrive on a good Q1 earnings season.

Dave’s vote: 20%

Situation 3: The Mildly Bearish Situation

The 2 bearish eventualities would imply that the latest upswing begins to show decrease as renewed fears of inflation, geopolitical danger, and a weak earnings season all weigh on danger property. A mildly bearish situation means maybe that we see some indicators of optimism as buyers start to really feel extra aware of the flurry of coverage selections from Washington. And though we have not gained a lot floor by the top of April, it undoubtedly feels as if the bear section is proscribed.

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 issues, it isn’t arduous to examine a situation 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 situation looks as if the most certainly consequence based mostly on the breadth and momentum deteriorations we have been monitoring for months on our each day market recap present.

Dave’s vote: 45%

What chances would you assign to every of those 4 eventualities?  Take a look at the video under, after which drop a remark with which situation you choose and why!

RR#6,

Dave

P.S. Able to improve your funding course of? Take a look at my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Analysis LLC

Disclaimer: This weblog is for instructional 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 personal private and monetary scenario, or with out consulting a monetary skilled.

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