Last year during the mania, some people could tell that the charts' parabolic movement was abnormal, and the textbook says there is always big retracement following big spikes. Smart/big money was playing a game of musical chairs, and bailed out at the top. Retail said “stocks to the moon” and kept FOMO'ing in near the top.
https://finviz.com/quote.ashx?t=QQQ&p=m&tas=0
If you look at the monthly chart on the index, whenever there's major negative sentiment, the price approaches the 50 month simple moving average. Last 2 times were late 2018 and covid.
From Jan 2017 to Jan 2019, QQQ went from ~120 to ~190, back to ~150. A little more than 50% retracement.
So considering covid low to peak and 50-60% retracement, and judging by where the 50SMA (~$250) is, $275 QQQ isn't unreasonable, though there is support around $300 during 2020 bull mania.
I bet big money isn't buying into the market until QQQ is in the $275-300 range, and you probably shouldn't either. We're almost there.
Leave a Reply