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The stock market just finished its worst quarter since 2022.
The Invesco QQQ Trust, Series 1 (QQQ) tracks the tech-heavy Nasdaq-100. Its top holdings include stocks like Nvidia (NVDA) and Apple (AAPL).
QQQ declined by 8.3% during the first three months of the year. At one point during the first quarter, QQQ was down 13.1% from its peak. That put QQQ in correction territory.
To make matters worse, a key catalyst behind the decline is facing investors again this week.
President Trump is holding his “Liberation Day” press conference to deliver updates on his tariff plans.
Investors are on edge over QQQ’s next move as the trade war enters the next stage.
But instead of guessing how QQQ will respond, let’s break down the chart action. I’ll highlight key levels and indicators you need to watch in the days ahead…
A Key Level Is Breached
The volatility this year can be a trader’s best friend… if you know how to leverage it to your advantage.
Subscribers in my One Ticker Trader advisory have a 93% win rate on the 14 trades we’ve closed year-to-date. That includes both put and call options. We’re capitalizing on market pullbacks as well as rallies.
Several of those trades have been on QQQ. It rallied by 5.5% to start the year. But after peaking on February 19 at an all-time high, QQQ sank into correction and dropped below a key level.
Take a look at the chart below:
QQQ moved below its 200-day moving average (MA) at the arrow. Investors look at that as a long-term price support level.
QQQ attempted to recover that key level. But it got rejected and slid back to the lows seen during this correction.
The news headlines and price whipsaws continue to frustrate investors.
But another look at the chart gives us key levels and developments to tip what might happen next with QQQ…
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Battleground Levels to Watch
QQQ closed below the 200-day MA for the first time since the start of 2023. The pullback also led to the most oversold reading in over three years.
Take another look at the chart:
The Relative Strength Index (RSI) measures underlying price momentum. This sell-off has taken the RSI down to its most oversold level since the beginning of 2022 (circle).
That helped drive QQQ’s brief rally. But the 200-day MA has now become a resistance level to watch.
You can see how QQQ was rejected at the 200-day MA at the arrow.
QQQ went on to test its March 13 low. Now that’s giving us another pattern to watch.
Let’s look back at the chart yet again:
While QQQ is testing the March 13 low, the RSI is making a higher low. That’s a positive momentum divergence and could hint at a near-term reversal in QQQ. After all, rising momentum should eventually push up the price.
So here are the key levels to watch next…
On the downside, the price area around the $465-470 level marked the low and has been tested twice. That makes it a near-term support level.
On the upside, the 200-day MA remains the key resistance. If QQQ is getting ready to rebound, then watch for QQQ to recover above the 200-day. We’ll also want to see confirmation by the RSI moving above 50.
Tariffs and trade war headlines will drive plenty more volatility for QQQ. Yet analyzing the chart like we have today can provide clarity on where key levels exist… and where the next move could occur.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict