QQQ Has Downside Risk To Its 200-Week Moving Average. Here’s A Trading Strategy.

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invesco
IVZ
QQQ Trust ETF
QQQ
Tracks stocks in the Nasdaq 100. The daily chart shows that the ETF peaked at $408.71 on November 22, 2021, marking a significant reversal as it closed below the previous trading day’s low. A fall to its May 20 low of $280.21 triggered a bear market drop by 31.4%. It has been below the 200-day simple moving average since March 31, 2022. Without a price level below the market, the 200-week simple moving average turned negative at $261.33.

QQQ. daily chart for

The daily chart of QQQ shows that the index tracked its 50-day simple moving average higher until early 2022. Note that November 22, 2021 was a significant reversal day. With that day’s close a new high was set below the low of the day before. It was the first warning that 2022 could start with downside risks.

January 4, 2022 was another day of significant reversal. QQQ was below its 50-day SMA between January 4 and March 22.
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The EFT closed below its 200-day SMA on January 20 and then turned a risky 200-day level, failing to test on March 30. The minor weekly price level was $279.90 on May 20, a decline of $280.21. This is the lowest horizontal line on the chart.

Note the death cross formed on March 2, when the 50-day SMA broke below the 200-day SMA. It tested a selling opportunity on the 200-day SMA, which occurred on March 29.

The highest horizontal line is the half yearly risky level at $385.74. The middle horizontal line is the yearly pivot at $349.22.

Weekly Chart for QQQ

The weekly chart for QQQ is negative but oversold. It is below its five-week revised moving average at $312.39. It is above its 200-week simple moving average, or “reverse to mean”, at 1.
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34.

The 12x3x3 weekly slow stochastic reading is declining at 15.23. The measurement ranges between 00.00 and 100.00, where a reading below 20.00 is oversold. If this reading falls below 15.00, QQQ will be “too cheap to ignore”.

Trading Strategy: Buy QQQ on weakness of the 200-week simple moving average at $261.34. Reduce holdings on strength for the annual pivot at $349.22.

Credit: www.forbes.com /

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