Welcome to this new addition to my Buy Me a Coffee Page, where I will be reviewing the action in key stocks in the Invesco QQQ Trust ETF (QQQ).
The reason for this new column is that the QQQ Trust is an increasingly important trading instrument for many investors. Moreover, even though it’s often billed as a technology ETF, that’s an inaccurate description. Certainly, its top ten holdings are large cap technology stocks, which I list below.
Apple (AAPL) - 10.6%
Microsoft (MSFT) - 9.66%
Amazon.com (AMZN) - 5.7%
NVIDIA (NVDA) - 5.6%
Metal Platforms (META) - 3.7%
Tesla (TSLA) -3.3%
Alphabet (GOOG) - 3.14%
Alphabet (GOOG) 3.13%
Broadcom (AVGO) - 2.96%
Adobe (ADBE) - 2.08%
Together these ten stocks, which are indeed technology companies account for nearly 49% of the ETF’s weighting. What that means is that the action in these stocks is a big contributor to the price of the ETF.
But the other 90 stocks include many stocks that are not in the technology sector at all. Here is a sampling:
Costco Wholesale (COST) - 2.06% - (Retail)
T- Mobile U.S. (TMUS) - 1.41% - (Telecom)
Mondelez International (MDLZ) - 0.811% - (Food Manufacturing)
CSX Corp. (CSX) - 0.52% - (Railroad)
Baker Hughes (BKR) - 0.30% - (Oil Service)
As you can see by the small sampling above, there’s a lot more to QQQ than meets the eye. Moreover, many investors own these stocks directly or through retirement plans such as their 401 (k), IRAs, or through mutual funds and other indirect investments.
Moreover, the lack of detailed information on many of these companies and what their stock price may mean not just for the stock market and investments for the economy is spotty at best.
Thus, in each installment of this column, you can expect detailed coverage of how active QQQ components are behaving and what that may mean beyond the market.
QQQ Holds Up Better than Market
As I describe in detail each week, in Joe Duarte’s Smart Money Market Summary, the QQQ Trust owns the stocks in the Nasdaq 100 index (NDX). You can get the details on the index by clicking the link above.
Here, I will be looking at the trading action in QQQ itself on a weekly basis as well as highlighting stocks with important developments.
QQQ itself is currently in a consolidation pattern with the $370 area providing important support. A move below $370 would likely take the ETF perhaps as low as $350, which would be a negative for the market given the effect of the big stocks held in the portfolio.
A big reason for the weakness in QQQ lately has been the performance of Apple shares. The company’s most recent reveal of its next generation iPhone wasn’t very exciting and there are conflicting reports of China restricting the use of Apple products by its government workers. Apple hasn’t addressed the reports. But there is likely some truth to them, which means the stock will likely trade softly until the market either forgets about this or something else happens.
On the other hand, shares of Alphabet (GOOGL) have been moving steadily higher lately as it continues to promote its AI infrastructure and expectations of future growth for the company based on AI. You ca see that Accumulation/Distribution (ADI) and On Balance Volume (OBV) are moving higher. Those are signs that money is moving into the stock. In contrast, the OBV for Apple is sloping downward indicating that money is currently moving out of that stock.
Perhaps, the most interesting stock in QQQ currently is Tesla (TSLA). The electric vehicle (EV) market seems to be nearing a major inflection point, which would likely favor Teslas ability to increase its market share.
I recently wrote an article about a parking lot full of Teslas, which is worth reading. This is especially prescient in the wake of the uncertainty being raised by the UAW strike against the big three Detroit automakers; GM, Ford, and Stellantis.
Note that as Apple has been falling, TSLA has been moving steadily higher. There is good support near the $250-$265 area.
Bottom Line
The bottom line is that although QQQ isn’t just a technology ETF, its heavy tilt toward technology means that its share price will usually react to technology related news.
Currently, Apple, the largest capitalization stock in the index is showing some weakness. On the other hand, stocks such as TSLA and GOOGL are in uptrends.
As a result, it pays to look under the hood.
Thanks to everyone for their support. This page is growing steadily thanks to you. I really appreciate it.
If you like this report and want to receive it on a regular basis, consider becoming a member.
I also appreciate single coffees, which you can buy me here.
Special shoutout to new member Retired Kevin and coffee buyer Bud W. Thank you for your support.
Please don’t forget to hit the Like button on the posts. It helps to spread the word.
You’re the music. I’m just the band.