Invesco QQQs Are Leading on the Upside

Many market watchers are worried that the rally in the Nasdaq names is too narrow and that it's vulnerable to a reversal. I think they protest too much.

Let's look at the charts of the Invesco QQQ exchange-traded fund  (QQQ) , which is based on the Nasdaq 100 Index. As the name implies, the index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.

In this daily bar chart of QQQ, below, I can see that prices made three lows in the $260 area in October, November and January. Prices have rallied from the January low and now trade above the rising 50-day moving average line as well as the rising 200-day line. Prices pulled back in March to successfully test the 200-day line.

The 50-day line has crossed above the 200-day line for a bullish golden cross. The On-Balance-Volume (OBV) line shows a rise from the beginning of the year and helps to confirm the price gains we have seen so far. The Moving Average Convergence Divergence (MACD) oscillator turned bullish in January.  

 

In this weekly Japanese candlestick chart of QQQ, below, I see a bullish picture. Prices have made a base pattern and have regained its bullish position above the rising 40-week moving average line. I do not see any upper shadows to warn of a potential turn lower.

 

The weekly OBV line is strong and tells me that buyers of the QQQs are being more aggressive than sellers. The MACD oscillator is in a bullish alignment above the zero line. 

 

 

In this daily Point and Figure chart of QQQ, below, I can see an upside price target in the $419 area. 

 

In this weekly Point and Figure chart of QQQ, below, I can see the same bullish price target as the daily chart above. 

 

Bottom line strategy: Many market watchers are worried that the rally in the Nasdaq names is too narrow and that it is vulnerable to a reversal. I think they protest too much and they are "fighting the tape". I favor the long side risking to $310. 

 

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