MACD & Two QQQ Upside Targets
An excerpt from today's morning note
TGIF - Here are a few thoughts on the SPX and QQQ that appeared in this morning’s Opening Look piece. It’s about 20% of the content that our Premium CappThesis members received pre-market.
Have a great summer weekend. Best, Frank
MACD
Let’s revisit the MACD — as readers know, it has been an instructive gauge of market momentum over the last few months. Since May, it has now flashed three sell signals, and each time, those signals have proven to be false.
In other words, each failed sell signal has effectively acted as a bullish confirmation. That in itself is noteworthy — when a reliable momentum gauge fails to confirm weakness, it often points to underlying market strength…
Just look at all of the blue lines on this chart over the last 13 months. Each of those lines highlights a MACD sell signal that didn’t play out. While the SPX did pause before — and sometimes after — those failed signals, initiating shorts or taking profits just because the indicator’s faster line crossed below the slower line (even while still above zero) has clearly not worked.
So, how much longer can this persist?
We certainly can’t ignore these signals entirely — because when they do work, they really work, as shown by the prominent red lines on the chart.
But really, this same scenario has repeated across multiple indicators in recent months. The term “overbought” has practically lost meaning in this environment — the market continues to grind higher despite technical “caution.”
It won’t last forever, but as Christian Fromhertz of Tribeca Trade Group said yesterday on X: “remember, one of our jobs as traders it be on the right side of the market and sit tight vs constantly looking for something that could go wrong.”
Nailed it.
QQQ NASDAQ 100
The QQQ ETF continues to extend its advance from the major breakout in mid-May. Like many other ETFs and stocks, the move has become more consistent and calmer, with price action over the last 2.5 months fitting neatly into the upper-sloping trading channel pictured.
Of course, we know things won’t stay this clean forever — but as long as this trend continues, there’s a clear and obvious path toward the upside target of 584, which is now just 3% above last night’s close.
But that’s not the only bullish pattern in play…
Zooming out to the weekly chart, the push through its former high near 540, back in late June, has produced an even larger inverse head and shoulders pattern.
Given the height of this formation, the resulting upside objective is significantly higher — up at 678. That’s approximately 20% above current levels, which would represent a considerable advance. But let’s not forget: QQQ is already up 40% from the April low. So a move of this size would still be smaller than what it has already achieved.
There’s no strict timetable for reaching a lofty target like this, but as long as QQQ remains above its former high, that target stays firmly in place.
