The charts show a tech breakout that can continue over the next 6-12 months, says Katie Stockton

CNBC

a day ago

The Invesco QQQ ETF , which provides a way to invest in the Nasdaq-100 Index, confirmed a breakout to new all-time highs with last week's close above the December and February peaks (~$539). The breakout is associated with renewed long-term momentum indicated by a whipsaw in the monthly MACD, marking a resumption of a multi-year secular uptrend. The breakout allows for a measured move projection of $602, which is approximately 9% above current levels as a reasonable objective looking out six-to-12 months. Since the April low, QQQ has outpaced SPY by approximately 7%, fueled by its heavier weighting in technology stocks that have led the recent rally. The ratio of QQQ to SPY is deeply overbought and has resistance intact from the 2021 peak, defining a neutral long-term trading range between the two U.S. equity market proxies. This suggests there will be a short-term moderation in outperformance from QQQ and large-cap technology stocks. But large-cap technology stocks look overdone as a group per the DeMark Indicators. Roughly a third of S & P 500 tech sector member have flashed short-term exhaustive "sell" signals from either the TD Sequential or TD Combo models within the past week. These signals support a two-week correction for the technology sector, and therein also QQQ. Pullbacks or consolidation phases tend to follow breakouts since they are often associated with overbought conditions and overly bullish sentiment. So, rather than chasing steep rallies, we find it is best to wait for excesses to be absorbed via a short-term counter-trend pullback before adding new exposure. For QQQ, we would be interested in a lower risk entry closer to support, potentially from June's gap which would be filled at $532. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: None. 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