The Nasdaq has been a leader during this recent rally as tech stocks continue to power their way higher.
That’s helped drive the S&P 500 higher too, but lately it’s been tech stocks that have stolen the spotlight.
First, we had a big rebound in high-growth tech stocks, which were previously enveloped in a bear market.
Don’t forget that Alphabet (GOOGL) - Get Report has been the best-performing FAANG component, while other top Nasdaq weightings like Facebook (FB) - Get Report and Microsoft (MSFT) - Get Report have also done well.
Amazon, Apple, Microsoft, Alphabet and Facebook are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN, AAPL, MSFT, GOOGL or FB? Learn more now.
Trading the QQQ ETF
For the purpose of using the most accessible investing vehicle, let’s look at a chart of the QQQ ETF.
The trend has been higher for a while now, although two notable dips materialized in mid-February and early May. Those coincided with the big dips we saw in high growth stocks.
Now though, the QQQ ETF has been on a strong run. On Thursday, we got our first test of the 10-day moving average in 12 sessions. Bulls bought the dip immediately off the open, filling the gap from Wednesday in the process.
The fade from this week’s high came right near the 161.8% extension of the current range. Now we’ll have to see if the QQQ can push up through $363 or if another dip materializes.
Friday’s breadth is strong across the board and I’m not one to bet against the Fed or a strong trend.
However, it’s foolish to ignore the impressive rally we’ve been on. If the QQQ takes out Thursday’s low, we could be looking at a deeper dip, potentially down to the 21-day moving average and $347 to $350 zone.
On the upside, $375 may be hard to achieve in the short term, but it’s possible.