{"id":5336,"date":"2024-06-15T00:03:04","date_gmt":"2024-06-15T00:03:04","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/06\/15\/could-the-qqq-turn-dramatically-lower\/"},"modified":"2024-06-15T00:03:04","modified_gmt":"2024-06-15T00:03:04","slug":"could-the-qqq-turn-dramatically-lower","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/06\/15\/could-the-qqq-turn-dramatically-lower\/","title":{"rendered":"Could the QQQ Turn Dramatically Lower?"},"content":{"rendered":"
\n

There is no denying the strength of the bullish primary trend for stocks off the April low.\u00a0The Nasdaq 100 index continues to make new all-time highs, closing just under $480 on Friday after gaining about 3.5% over the last week.\u00a0But will this incredible uptrend continue into July and August?<\/p>\n

We\u2019ve been tracking plenty of warning signs, from the dramatic increase in bearish momentum signals<\/a> to an <\/span>initial signal from the Hindenburg Omen<\/a> in late May.\u00a0But, despite those bearish implications, the strength of mega-cap growth stocks, like Nvidia (NVDA) and Apple (AAPL), has been enough to drive the major equity benchmarks higher.\u00a0The question for investors is whether the strength in these leading growth stocks will be enough to keep this bullish market trend in place!<\/span><\/p>\n

Today, we\u2019ll lay out four potential outcomes for the Nasdaq 100.\u00a0As I share each of these four future paths, I\u2019ll describe the market conditions that would likely be involved, and I\u2019ll also share my estimated probability for each scenario.<\/p>\n

By the way, we conducted a similar exercise for the Nasdaq 100 back in February, and you won\u2019t believe <\/em>which scenario actually played out<\/em><\/a>!<\/em><\/p>\n

And remember, the point of this exercise is threefold:<\/p>\n

Consider all four potential future paths for the index, think about what would cause each scenario to unfold in terms of the macro drivers, and review what signals\/patterns\/indicators would confirm the scenario.
\nDecide which scenario you feel is most likely, and why you think that\u2019s the case. Don\u2019t forget to drop me a comment and let me know your vote!
\nThink about how each of the four scenarios would impact your current portfolio. How would you manage risk in each case? How and when would you take action to adapt to this new reality?<\/p>\n

Let\u2019s start with the most optimistic scenario, involving the QQQ pushing above $500 over the next six-to-eight weeks.<\/p>\n

Option 1: The Very Bullish Scenario<\/h2>\n

The most optimistic scenario would mean the Nasdaq 100 continues its incredible pace, pushing well above the $500 level by the end of July.\u00a0Not only would leading growth names continue to thrive in this environment, but other stocks that have not been participating \u2013 such as Energy and Industrials \u2013 would likely rotate higher as a broader advance propels the QQQ to further new all-time highs.<\/p>\n

Dave\u2019s Vote: 10%<\/em><\/p>\n

Option 2: The Mildly Bullish Scenario<\/h2>\n

What if the market remains elevated, but the pace slows way down?\u00a0This second scenario would mean that the Magnificent 7 stocks would stall a bit, and perhaps other stocks would rotate higher.\u00a0The major benchmarks would remain in a primary uptrend, but we\u2019d be talking about leadership rotation as the market remains in a \u201cwait and see\u201d mode about potential Fed rate cuts later in 2024.<\/p>\n

Dave\u2019s vote: 25%<\/em><\/p>\n

Option 3: The Mildly Bearish Scenario<\/h2>\n

Both of the bearish scenarios would involve a pullback in leading growth names, and if leading names like NVDA begin to retrace their gains from early 2024, we could face a mildly bearish scenario.\u00a0Breadth conditions remain weak and, after the leaders start to fail, there\u2019s nowhere to go but lower.\u00a0In scenario #3, I would expect the May low around $443 to hold for the QQQ, and this begins to feel like a well-deserved pullback while the primary uptrend still remains in place.<\/p>\n

Dave\u2019s vote: 60%<\/em><\/p>\n

Option 4: The Super Bearish Scenario<\/h2>\n

You always need to have a super bearish outcome, which helps to put the other three into proper perspective.\u00a0In scenario 4, the leadership stocks give back their recent gains, and perhaps some strong economic data brings the whole \u201cFed Goldilocks scenario\u201d into question.\u00a0The QQQ drops below its May low, and by late July we\u2019re debating whether the April low will hold.\u00a0While the major equity benchmarks still have positive returns in 2024, this corrective move forces even the most optimistic of bulls to reconsider their thesis.<\/p>\n

Dave\u2019s vote: 5%<\/em><\/p>\n

What probabilities would you assign to each of these four scenarios?\u00a0Check out the video below, and then drop a comment with which scenario you select and why!<\/p>\n

<\/div>\n

RR#6,<\/p>\n

Dave<\/p>\n

P.S.<\/strong> Ready to upgrade your investment process?\u00a0Check out my free behavioral investing course<\/a>!<\/span><\/p>\n

David Keller, CMT<\/strong><\/p>\n

Chief Market Strategist<\/p>\n

StockCharts.com<\/p>\n

Disclaimer: <\/em><\/strong>This blog is for educational purposes only and should not be construed as financial advice.\u00a0The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

There is no denying the strength of the bullish primary trend for stocks off the April low.\u00a0The Nasdaq 100 index continues to make new all-time highs, closing just under $480 on Friday after gaining about 3.5% over the last week.\u00a0But will this incredible uptrend continue into July and August? We\u2019ve been tracking plenty of warning […]<\/p>\n","protected":false},"author":0,"featured_media":5337,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-5336","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=5336"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5336\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/5337"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=5336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=5336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=5336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}