Invesco QQQ Trust ETF

The Invesco QQQ Trust (NASDAQ: QQQ) is an exchange-traded fund (ETF) that tracks the Nasdaq 100 and features companies such as Apple (NASDAQ: AAPL), Google (NASDAQ: GOOGL), NVIDIA (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT) and PayPal (NASDAQ: PYPL). 

The Nasdaq 100 is primarily made up of tech stocks, and the QQQ is, for the most part, made up of all the stocks in the Nasdaq 100. The index comprises the 100 largest non-financial companies listed on the Nasdaq. Most of its holdings are in information technology stocks, but it also holds consumer, healthcare and utility companies. The QQQ fund, as well as the index, are rebalanced every quarter.

With stocks, in particular tech stocks, on the slide in recent weeks, QQQ has, of course, followed the trend lower. So, where could QQQ be heading in the medium term? You’ve seen the commercials, but what is it really all about?

QQQ Price

As mentioned, QQQ stock has been falling since early September after reaching a high of around $382 on September 7. However, its share price has seen a massive rally from the pandemic lows in March 2020, more than doubling since then.

No asset price will continue to rally almost vertically (on the weekly chart, it looks practically vertical) without pulling back or having a significant fall at some point. So, in the grand scheme of things, the recent fall should come as little surprise.

That does not mean it won’t continue to fall, but putting the recent decline into perspective is essential to make better analytical decisions. Besides, QQQ is still up in the last 12 months. 

QQQ Forecast

So, there has been a fall, but is it time to panic? No, of course not. Again, that’s not saying the stock couldn’t see a more significant decline, but the current move has to be put into perspective. 

Over the last 10 years, the fund has provided an average market return of around 21%, which suggests there is still room for the fund to continue higher in 2021. However, 2020 and 2021 have been like no other year, resulting in an enormous rally after the initial fall following the COVID-19 outbreak. As a result, some analysts have commented that a pullback was needed. 

Tech stocks are a prominent factor in the fund and index, and with countries going into lockdown following the outbreak, the demand for tech products such as laptops and gaming products soared, contributing to the rise in the fund’s share price. However, since then, economies have started reopening, and that demand has fallen somewhat. This fall has coincided with a semiconductor shortage brought about by the initial demand, which has seen those tech stocks’ share price drop, and in turn, contributed to the drop in the Nasdaq 100 and QQQ. 

However, as the semiconductor shortage eases and product demand evens out, those tech stocks could get back to some form of pre-pandemic normality. 

While the market as a whole dipped in recent weeks from various economic worries, some analysts feel that it is just a dip and that shares will begin to turn around. 

QQQ News

As the QQQ is an ETF and holds a basket of stocks that tracks the Nasdaq 100, there will, of course, be no QQQ-specific news. However, it is crucial to watch the overall stock market, analyze market sentiment, look at recent earnings releases and understand the current macroeconomic environment. 

Some recent stories that have impacted stocks are the semiconductor chip shortage, which has impacted car and tech stocks alike, the U.S. and China trade relationship, the Facebook (NASDAQ: FB) whistleblower testifying before congress and the U.S. debt limit. 

To stay updated on news events impacting the QQQ ETF, you can add the stock to your watchlist on Benzinga.

How to Buy Invesco QQQ Trust Series 1

Not all brokers will carry ETFs, but if your current broker does, all you need to do is search for QQQ on the platform, open a trade ticket, fill in the details and click submit or buy to acquire shares in QQQ. 

However, if your broker does not allow you to buy QQQ shares, or you don’t yet have a brokerage account, then here’s what you need to do.

Find a brokerage.

A broker acts as the intermediary between you and the stock exchange (in this case, the Nasdaq). The customer places an order via their broker to buy a stock, and the broker carries out those instructions. If you decide to purchase shares in QQQ, you instruct your broker to buy the number of shares you request at the price you set, and it carries out those instructions. 

In return, the broker charges you a fee for its services. The fee varies depending on the broker. Therefore, it is vital to research costs and other aspects before setting up an account.

Decide How Many Shares You Want to Buy

Once you have chosen a broker, you need to fund your account and decide how many shares to buy. Take into account the amount of risk you want to take and the percentage of your account attributed to QQQ. 

Starting with a small investment and adding consistently over time is a strategy used by many investors. However, before you make your purchase, consider how you will enter the market. 

Choose Your Order Type

This stage requires you to decide on how your position is executed. Different order types exist, but the primary 2 you need to know are market and limit orders. 

Market orders mean you acquire the shares at a price dictated by the market. Or, in other words, you buy at the current market price. Therefore, using market orders results in a high chance your order will be filled. 

Limit orders mean that the price you buy the stock at is decided by you. You can determine what price you buy the shares at, but you face the risk that the order won’t be filled if the price doesn’t hit your predetermined level. 

Buy the Shares

After you have completed all the necessary steps to put you in a position to buy the shares, all that is left to do is just that — buy the shares. Once you have opened the trade ticket and completed the required fields, the last thing to do is click buy. Once completed, you can monitor the stock and your other positions by navigating to the correct tab on your brokerage platform.

Best Online Stock Brokers for QQQ Stock

Making sure you have an account with the right stockbroker is not always an easy process, and many traders get caught out by fees and other platform issues. Therefore, it’s essential to thoroughly review the broker you want to set up an account with. Below you can see a list of the best online brokers for QQQ.

QQQ on Benzinga Pro

Screenshot taken from Benzinga Pro on 10-07-2021

In the QQQ chart above, you should see 3 indicators — the RSI, 50-Day Moving Average and Bollinger Bands on the daily QQQ chart.

The RSI, a leading indicator, briefly dropped below the 30 level on October 4, indicating that the shares may be oversold. From there, the stock has moved higher along with the RSI, which is an encouraging sign for investors. 

Looking at the Bollinger Bands, we can see the price has been sitting around the lower band for some time. So again, this indicates that the shares are oversold. 

The Moving Average is the outlier when it comes to the 3 indicators on the chart, with price currently below the 50MA. The 50MA is considered the first line of resistance in a downtrend and the first line of support in an uptrend, so it will be key to watch the price when it approaches the moving average. 

Should You Always Buy the Dip?

Looking back at historical price data would suggest that buying the dip is always positive, but it’s important to look deeper than that. The trend is your friend until the end, but we never know when the end will come. So, analyze historical data over a significant period of time and look at the different stats on whether buying the dip is a prudent strategy and what will trigger your entry point. You can only be confident if you have done your homework. 

Frequently Asked Questions