Is QQQ still a buy now?

Disclaimer: The purpose of the this article is solely for education purpose. It is not a stock recommendation, please do your due diligence (dd) before you do any sell 9r purchase. 

I read an article last week in the tiger community, asking whether can he/she buy QQQ now?

QQQ has been beaten in 2022

This is a very common question when I was still new in investing, I asked smiliar questions.

Today, I will like to share 2 Technical Analysis (TA) that I will use to determine whether to buy or sell a stock using QQQ as an example.

The first TA I always use is the Parallel Channel (PC) On the chart above, I have drawn a PC that happens to be a down trend for QQQ in 2022. You will probably known that QQQ suffered a year long downtrend in 2022.

I marked 3  red squares. For a downtrend stock, I will find 2 lower peak (marked as 1 and 2) and draw a straight line and place a parallel line at bottom of the first bottom marked by 3.

If you have notice, the stock price actions mostly stick within the PC. To benefit from a down trend stock, you will sell at 2, 4 and 5 and take profit when the price action touch the bottom PC line for maximum risk to reward. There are also false break out at point 4 and 5. One must make dd when to cut loss. 

Current QQQ Trend, PC is uptrend

Now next plot the uptrend PC. I will choose 2 higher peak (orange Square 1 and 2) and draw a line, the I will place the parallel line at first bottom (orange square 3). This will form an uptrend PC.  Ideally to buy at  3 as it has the maximum rewards vs risk. Judging from the chart, QQQ will peak at late April and expected to touch bottom Point A perhaps late May which is a good buy point. For uptrend PC, ideally to buy when touch bottom PC line, but we must put in cut loss if the market goes down against us. Alternative can enter buy trade at point B.

Fibonacci Retraction

Some might say, if I wait for PC, it will take forever to buy. It is definitely not a good trade for realist. Thus we can use another TA, Fibonacci Retraction.

Fibonacci Retraction for uptrend stock place first point at bottom of the chart (red zone) and rise to the peak  (grey zone) like PC, price action always stop or rebounce at fibo point, the coming point to buy is at 0.5, if it is a confirmed pass, we are possible to go back previous peak. However if it goes south, I will probably wait for fibo 38.2 or fibo  23.6 rebound to buy.

TA is always good tool for analysis short time trend where FA (Fundamental Analysis) is to Analysis stock for long term roi.

Hope now fellow tigereans learnt 2 new TA to analysis when buy or sell stocks. Please do your DD before buying or selling. If you know how to use options, it can be a good tour.

Do note that 180 days to expiry, options will have big drop of price