The Daily Breakdown: QQQ Hits Overbought Territory

The Daily Breakdown takes a closer look at the QQQ as the ETF soars to new heights…but enters overbought territory on the charts.

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What’s Happening?

Stocks ended Friday on a hot streak, with tech leading the way. The Nasdaq 100 rose more than 2.3%, while the S&P 500 jumped 0.8%. Both indices notched their sixth straight weekly gain. Crypto continues to inch higher too, with Bitcoin now rallying five of the last six weeks. 

👀 What to Watch for

This week’s focus is a blend of earnings and economic reports, with the CPI inflation report on Tuesday morning, followed by retail sales on Thursday. Both reports will be released at 8:30 a.m. ET. On the earnings front, Alibaba and JD.com stand out, along with a few others like Oklo, Cisco Systems, AST SpaceMobile, Hims & Hers Health, Ondas, and Applied Materials. 

⚡ Crypto Corner

So far, Monday’s a tough day in the crypto space, but last week had a number of strong performers. Ondo climbed more than 45%, Near Protocol rallied 22%, and Solana jumped nearly 15%. Chainlink and Cardano also had solid showings.

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Chart of the Day — QQQ ETF

Below illustrates what a six week, 26.4% rally looks like for the QQQ ETF. 

The QQQ ETF has hit a new record high in seven straight sessions, with bulls cheering the move and bears wondering when this rally may lose steam. Included on this chart is the Relative Strength Index — or RSI — which is a momentum indicator that helps identify potentially overbought or oversold conditions. Below 30 is considered oversold, while above 70 is considered overbought. 

Now trading with an RSI above 81, many technical traders are hesitant that the rally can continue without some sort of pause. However, a word of warning with the RSI: A stock can always become more oversold or overbought than one might think. 

Options

Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration. 

To learn more about options, consider visiting the eToro Academy.

What Wall Street’s Watching

CRCL

Circle’s USDC in circulation grew 28% year-over-year to $77 billion, while on-chain transaction volume jumped more than 260% to $21.5 trillion. Yet the company missed on earnings and revenue expectations. Shares are slightly positive in pre-market trading with optimism around the CLARITY Act driving the narrative. Dig into the fundamentals for CRCL. 

MRNA

Shares of Moderna have been rallying lately, climbing almost 20% last week — including a 12% jump on Friday. This morning, shares are higher by more than 5% and hovering near the stock’s 52-week high of $59.55. The conversation around MRNA picking up amid increased coverage around the hantavirus. Check out the chart for MRNA.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.