Stocks Analysis by Fawad Razaqzada covering: Invesco QQQ Trust, Alphabet Inc Class A, Amazon.com Inc, NVIDIA Corporation. Read Fawad Razaqzada's latest article on Investing.com
QQQ, an ETF tracking the Nasdaq 100, is nearing overbought territory but the bullish trend remains intact.US index futures have been relatively flat following a mixed close yesterday, with a few tech giants reaching new all-time highs.
Investors are largely on hold ahead of Friday’sHowever, this trend could shift as Wall Street opens, with the tech sector potentially leading the charge again. Given the bullish price movements in stocks like Amazon as a critical level. A drop below this could invalidate the breakout, potentially leading to a sell-off. If support holds, Amazon could target $195 initially and $200 subsequently.Alphabet has consistently reached new all-time highs, breaking out of a bullish consolidation pattern this week and surpassing the $180 resistance level. It has since exceeded the recent high around $182, making this a critical support level. Ideally, the stock should stay above this breakout area, but falling below it isn't disastrous unless it drops past the recent low around $175.62, which would undermine the bullish breakout.Tesla’s long-term chart shows a bearish trend since November 2021, with several lower highs. However, short-term action since late April has been bullish. The stock broke past the $180 resistance and has hovered around this psychological level for weeks. This week, Tesla moved higher, surpassing short-term resistance at $188, now the crucial support level. On the upside, $200 is the next hurdle, with minimal resistance until the bearish trend line around $220, depending on the price movement. The recent low at $176.92 is critical; a break below it would negate this week's bullish trend and potentially deter investors.Nvidia, a key stock for the tech sector, has been volatile recently, falling from its record high of $140.76 last Thursday. Currently, it seems to have found support around $118, holding above the 21-day exponential moving average. The break above Monday’s high of $124.46 must hold on a daily closing basis to sustain bullish momentum. The critical support level is $118. In terms of resistance, $130 is the key level to watch, having served as support before last week's breakdown.The chart of QQQ, an ETF which tracks the performance of the Nasdaq 100, remains constructive for now. But the RSI is still near the overbought levels of 70, which may need to be addressed before we potentially see the next big upward move. Since the end of May, QQQ has rallied almost 10% from its lowest point of 443.06 to its most recent high so far of 486.86. It has made more than 17% when you use its lowest point made in April at 413.07. As a result of this sharp rally, the index has reached extreme overbought technically levels. For example, the relative strength index has now climbed well above the 70.0 threshold to reach north of 80.0. With the market being this overbought, it is becoming increasingly uncomfortable for traders to justify continued buying into mini, intraday, dips. The RSI needs to work off its overbought conditions, at least through time if not price action . For this bullish trend to remain intact, you obviously don't want to see too much technical damage. But a bit of a pullback should be a welcome sign, even from a bullish point of view, as this will remove some froth from the market. Last week saw QQQ reach 485.61, the 200% extension level of the last downswing that took place between March and April. With the RSI being above 70 at that point, the subsequent drop is understandable. The RSI is now a little less overbought, but it remains near 70. If the bullish trend continues, then that 485.61 level would remain the first objective. Meanwhile, the 261.8% Fibonacci extension of the same swing comes in at 508. In between those extension levels, you have the psychologically-important 500 level, which also needs to be watched closely, should we get there. In terms of support levels to watch, the first line of defence for the bulls is at 473/474 area, which was tested and held earlier this week. Below that, 468.14 is the next level down, where we have seen a breakaway gap. The latter also comes in close proximity to the 21-day exponential moving average. A more significant support zone is seen at around 449, which corresponds with the high from May. The bulls would be happy they have now seen a bit of a pullback and consolidation. However, if we instead see a full-on sell off that potentially takes out the most recent low at 443.06, then that would be a bearish development, for then we will have created our first lower low. In that case, we could then see some follow up technical selling towards the 200 moving average and long-term support at around 412, which was also the high from last year.This summer, get exclusive discounts on our subscriptions, including annual plans for less than $7 a month!This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. 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