Monday Market Milestones
RLT Newsletter
So far, the QQQ is giving us almost the exact same bottoming pattern that we saw in April. It only closed below the 100-day SMA for a single day before reclaiming it with a powerful gap-and-go reversal.
The first major short-term target is the overhead gap fill around $703. That area has the potential to be meaningful resistance because it also lines up with the Point of Control from the March lows and the Anchored VWAP from the recent high.
Even if we do stall there, it does not mean we have to make a new low. A period of consolidation followed by a pullback to the 100-day SMA, or even back toward the $687 area, would be a healthy setup for buyers to step back in. If the bulls can then clear the $703 to $710 resistance zone, I think we can confidently say the summer low is behind us and the path toward new highs is open.
The biggest question now is whether we get more flush before a durable bottom is in place. For me, the 100-day SMA is the line in the sand. As long as QQQ stays above it, I am operating under the assumption that the low is already in. If we lose that level, I will be looking to buy aggressively at the 200-day SMA because I still believe the bigger trend points higher into the fall.
Whether we have already seen the low and simply build higher lows from here, or we get one final washout during August before turning higher, my positioning remains the same. I want to be invested for the next leg toward new all-time highs.
I have been saying for weeks that this correction was buyable, and many of the strongest names finally reached the buy zones that investors have been waiting for. From the 100-day SMA, QQQ had roughly 10% upside just to retest its prior all-time high. That is an attractive risk-reward setup. If you were hesitant to chase high-beta AI names with wide swings, QQQ was, and still is, an excellent way to gain exposure. Adding a small position in TQQQ can provide extra upside for those comfortable with additional volatility.
TQQQ Daily Chart
I also do not believe a move back to the old highs is where this rally ends. That would imply a double top, and while that is always possible, it does not match what I am seeing across the major indexes or the broader market. My upside targets for QQQ remain in the $760 to $800 range.
Positioning correctly for this move has the potential to cap off an excellent year for the bulls. After two months of choppy, frustrating price action, I believe we are getting much closer to the next sustained breakout. That is where my focus remains. If this plays out as expected, I think there is another 15% to 20% of easy upside available before the year is over.
I am staying focused on the bigger trend, not every headline or every intraday move. That is where I believe the biggest money will be made over the coming months.