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Is the Tech Stock Sell-Off Here to Stay? Analyzing the QQQ Support Level Breakdown

The technology-heavy Invesco QQQ ETF (QQQ) plunged below a critical technical level on Friday, signaling further downside could be in store for the former leadership sector.

The QQQ ETF tracks the Nasdaq-100 index of major tech stocks like Apple, Microsoft, Amazon, and Nvidia. It fell as low as $414.05 intraday, decisively breaking below its 100-day moving average around $422. A drop below this key trendline is technically bearish and could foreshadow more losses ahead.

The breach comes after a 7% decline for the QQQ from its 52-week high of $449.11 set on March 21st. It has been a rocky stretch for tech following a banner 2023. Higher interest rates, recession fears, and lofty valuations have weighed on the growth-focused sector.

Our analyst team let our subscribers know that we were hedging the recent market run up in February 2024 by buying QQQ puts. In February, we purchased the May 17th $400 strike put option as a way to protect against downside.

That put option exploded higher by nearly 45% on Friday as the QQQ broke down. Johnson's firm was able to book a 20%+ gain by closing out that position intraday per their trading plan.

With the 100-day average now breached, technical analysts will be watching to see if the QQQ can find support at its 200-day moving average around $395. A break below that level would confirm the peak Print formation and signal a larger corrective phase is potentially underway.

After leading for years, tech stocks have been losing their luster in 2024 as economic growth concerns mount. The sector's inability to reclaim its uptrend could be a bearish signal for the overall market.

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The information provided in this report is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The opinions expressed in the report are our own and are subject to change without notice. We may have a position in the securities mentioned in the report, and we may buy or sell such securities without notice. Any investment decisions made based on the information in this report are solely the responsibility of the recipient. We do not accept any liability for any direct, indirect, or consequential loss arising from any use of this report or its contents.


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