QQQ - What comes after the FED

Yesterday, the FED raised interest rates by 75bps. Yet, despite the sound logic, the market ripped up an astounding 4% leaving many analysts perplexed. Before that, we said the rate hike would be bearish and negatively affect the economy. Additionally, we noted that tighter monetary policies combined with a slowing economy would further weaken the stock market. After the FED decision, we still stick to this narrative.

Recapitulation of moves on the day of previous rate hikes:
16th March 2022 = +4.31%
4th May 2022 = +3.44%
15th June 2022 = + 3.63%
*values are approximate

Meanwhile, despite the enormous magnitude of moves up, the general trend remained to the downside. As a result, we would like to set a new price target for QQQ at 300 USD. Accordingly, we would like to push our invalidation level for the bearish bias 1.2% above the yesterday's close price.

Illustration 1.01

The setup we introduced to our audience recently. Yesterday, the index rose approximately 4% from the immediate support/resistance level.

Technical analysis - daily time frame
MACD and Stochastic are bullish. RSI is neutral. DM+ and DM- are bullish. ADX contains a relatively low value, indicating a weak or no trend. Overall, the daily time frame is slightly bullish.

Illustration 1.02

Interestingly, after the FED decision, QQQ stopped its price rise 0.01 USD below the invalidation zone (for the bearish bias).

Technical analysis - weekly time frame
RSI and Stochastic are bullish. MACD performed a bullish crossover but stayed in the bearish zone. DM+ and DM- are bearish. Overall, the weekly time frame sends mixed signals.

Illustration 1.03

The picture above shows the Nasdaq continuous futures and updated support and resistance levels for the index.

Illustration 1.04

Illustration 1.04 shows several technical developments on the daily chart of NQ1!.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Trade active:

We will pay close attention to the release of initial jobless claims and GDP data at 2:30 pm EDT.

Trade active:

Against our expectations, the market rose strongly after the release of jobless claims and GDP data. Then, the rise continued after several tech giants reported their earnings (in the aftermarket).

In regards to the QQQ, it stalled 0.03% below the invalidation area (updated yesterday). If it will be hit today, we abandon our bearish bias.

Today we will again pay close attention to the data being released at 2:30 pm EDT.

Comment:

We want to note that yesterday's rally was mainly driven by two companies, Apple and Amazon, which comprise a significant % of SPX and Nasdaq. Therefore, we remain somewhat skeptical about the rally's longevity, especially since the (technical) recession was confirmed by two consecutive declines in GDP.

Trade active:

Our price target for QQQ stays in place; the same applies to the price target for NQ1! standing at 11 000 USD.

Trade active:

In our opinion, the Nasdaq 100 index is at its ultimate peak and due to reverse down. We are turning bearish for the short term.