Overview:
QQQ, which tracks the Nasdaq-100, is showing signs of exhaustion at the $535.55 resistance zone. A corrective pullback is anticipated as the ETF completes its 5th wave, aligning with overbought conditions and broader macroeconomic headwinds.
Technical Analysis:
Resistance Zone:
– Key Levels: $527.78–$535.55 (88% Fibonacci retracement).
This zone has capped recent bullish attempts, with a potential reversal into a bearish wave structure.
Elliott Wave Count:
– Wave 5: Likely complete, with a corrective wave (A-B-C) unfolding.
A break below the support trendline could signal the start of a more significant decline.
Targets:
– Target 1: $515.55 – Near-term pullback zone aligned with Fibonacci confluences.
– Target 2: $498.58 – Corresponds with the 1.0 Fibonacci extension of the corrective wave.
– Extended Target: $480.28 – Major support zone and 1.618 Fibonacci extension.
– Stop-Loss: Placed above $535.55 to avoid false breakout risks.
Macro Analysis:
Tech Sector Challenges:
– Rising interest rates are a headwind for growth-oriented sectors like technology, which dominate QQQ.
– Valuations appear stretched, leaving little room for error as earnings season approaches.
Economic Data:
Market sentiment is fragile amid concerns over slowing economic growth and potential Fed tightening in early 2025.
Nasdaq-100 Dependency:
Heavy reliance on a few mega-cap tech stocks makes QQQ vulnerable to concentrated risks.
Trade Plan:
– Short Entry Zone: $527.78–$535.55.
Risk-Reward Setup:
– Stop-Loss: $535.55.
– Target 1: $515.55 (RR ~ 2:1).
– Target 2: $498.58 (RR ~ 4:1).
– Extended Target: $480.28.
Considerations:
Look out for Nasdaq-100 earnings reports, which could act as a catalyst for volatility. Monitor economic releases, such as inflation and jobs data, which could shift sentiment.
Is QQQ poised for a reversal, or could the bulls defy the odds? Share your thoughts in the comments!