QQQ Cooling Phase

The monthly candles show a secular uptrend

• Price remains well above the 20, 50 & 100 month moving averages
  
• Even with the short-term volatility we’ve seen around $603-$613, that’s just noise inside a steep upward channel
  
• Big-picture momentum is still firmly bullish
  
• Intraday price range are temporary mean-reversions inside an ongoing trend
  

The long-term “fuel” is still there, but risk-reward for new longer-term entries is thinning, so a multi-month consolidation or modest correction wouldn’t be unusual

• RSI ≈ 76 is solidly overbought, but not diverging yet - typical of strong late-cycle trends
  
• When RSI stays above 70 for months, it signals strength, not necessarily exhaustion
  
• Stochastic ≈ 96 is extremely stretched which is often where monthly pullbacks (5–10%) - it can stay pinned for months before reversing
  

Volume has drifted lower since 2022, which hints that participation has narrowed to the mega-caps

• That aligns with what we’re seeing day-to-day with QQQE (equal-weight) lagging, concentrated leadership from the largest names
  

1. Continued grind higher

• If earnings/CPI stay supportive, QQQ could extend toward $630-$640 before serious resistance - hold above $600
  

2. Healthy correction

• A 5-8% dip to $570-$580 would reset momentum without breaking trend
  
• Support at 20 month MA (~$505) if deeper
  

3. Trend failure

• Only a sustained break below $500-$505 would turn the monthly chart bearish
  
• 100 month MA near $314 = long-term floor
  

The monthly chart shows QQQ in a mature but intact bull trend with momentum hot, volume thinning, room for a 5-10% reset without real technical damage

• For day-to-day trading, expect more mean-reversion around $600-$620 until volatility events pass
  
• Long bias remains justified while price is above the 20 month MA
  
• Intraday fades & pullbacks are tactical only - they’re counter-trend, not trend reversals
  
• Watch IV + macro catalysts since spikes in implied volatility (earnings/CPI) often create those short-term pullbacks without changing the monthly structure
  

Feb-Mar 2020

• RSI > 75
  
• Stoch > 95
  
• –12 %
  
• 1 month COVID crash (black-swan, outsized)
  

Nov 2021-Jan 2022

• RSI ≈ 77
  
• Stoch ≈ 96
  
• –10 %
  
• 2 months
  
• Rate-hike scare, peak valuation
  

Aug 2023-Oct 2023

• RSI ≈ 74
  
• Stoch ≈ 94
  
• –7 %
  
• 2 months
  
• Bond-yield spike/earnings reset
  

Apr 2024-May 2024

• RSI ≈ 76
  
• Stoch ≈ 97
  
• –6 %
  
• 1 month
  
• Macro pause, then continuation
  

-5% to -8% lasting 1-2 months while the long-term uptrend stays intact

• Current price ≈ $604
  
• –5 % ≈ $573
• Minor swing-low support (Aug 2024 area)
  
• –7 % ≈ $562
• Volume-weighted support/10 month MA
  
• –10 % ≈ $543
• 2024 high retest, deeper but still trend-safe
  
• That $560-$575 area would relieve monthly overbought conditions without threatening the secular trend
  

1. RSI divergence on the weekly chart (lower high while price makes a higher high)

• Weekly close below $600 confirms cooling momentum
  
• VXN (Nasdaq Volatility Index) >20 shows volatility expansion accompanying the fade
  
• Volume expansion on red candles after CPI/Fed events
  

2. RSI falls back toward 60-65 on the monthly

• Price stabilizes near the 20 week or 50d MA (roughly $575-$585)
  
• IV compresses again in a new accumulation phase/continuation toward prior highs
  

🧭 Summary
Historical overbought phases in QQQ resolve with a –5% to –8% dip over 1-2 months,
usually bottoming around $560-$575, then resuming the larger bull trend

• Anything beyond –10 % would signal a regime change rather than a standard reset