Invesco QQQ Trust Series 1 (QQQ) Stock Overview

An exchange traded fund launched by Invesco Ltd. More details

QQQ fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	0/6
Past Performance	1/6
Financial Health	6/6
Dividends	0/6

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Price History & Performance

Summary of share price highs, lows and changes for Invesco QQQ Trust Series 1
Historical stock prices
Current Share Price	US$724.08
52 Week High	US$748.65
52 Week Low	US$544.66
Beta	1.23
1 Month Change	-1.93%
3 Month Change	25.45%
1 Year Change	31.26%
3 Year Change	95.54%
5 Year Change	101.90%
Change since IPO	1,318.03%

Volatility Abounds And Headlines Rule The Market - Tradable Bounce Coming But Not A Momentum Market (Technical Analysis)

Summary The market's extreme volatility, driven by unpredictable headlines and tariffs, makes momentum trading challenging and unreliable in the current environment. I have shifted some retirement funds into stocks but remain cautious with my main accounts, preferring to wait for clearer trends. Market makers face significant uncertainty, making it difficult to deploy large capital, mirroring the challenges small business owners face. I anticipate Trump will eventually focus on boosting the stock market, but until volatility subsides, I will remain patient and hold cash. Read the full article on Seeking Alpha

Seeking Alpha • Mar 25

QQQ: Tariff Tensions Could Drag Nasdaq Tech Stocks Into Bear Territory

Summary Europe’s fiscal situation is deteriorating, and additional defense spending is needed, potentially leading to actions that could reduce U.S. Big Tech earnings and valuation multiples. Network externalities are fragile; Europe could develop local alternatives to U.S. Big Tech platforms, significantly affecting Big Tech’s market share and profitability. Investors should monitor this risk closely, as reduced Big Tech earnings and valuation multiples could lead to a broader bear market in U.S. tech stocks. Read the full article on Seeking Alpha

Seeking Alpha • Mar 19

QQQ Vs. KWEB: China's Lead Over The U.S. May Be Temporary

Summary The Invesco QQQ Trust ETF has shown strong gains, but faces short-term risks due to macroeconomic factors and trade policies impacting tech stocks. China's AI ecosystem is advancing rapidly, with companies like DeepSeek and Alibaba making significant strides despite U.S. chip embargoes, thus benefiting KWEB. QQQ's higher valuation is justified by its superior return on equity compared to KWEB, reflecting better profitability and efficiency. Economic headwinds like inflation, interest rates, and supply chain disruptions pose risks, but long-term growth drivers like AI and cloud computing offer potential offsets. At the same time, other positives for QQQ are good tax policy and deregulation. Read the full article on Seeking Alpha

Seeking Alpha • Mar 05

QQQ: The Bottom Probably Isn't In

Summary The Invesco QQQ Trust, which is built on the NASDAQ-100 index, is currently at its priciest level in decades. The index is at 40 times earnings! This is a very steep valuation. To make matters worse, Chinese companies are bringing low-priced competition to the big US tech names. In this article, I make the case that the QQQ is a sell at today's price level. Read the full article on Seeking Alpha

Seeking Alpha • Feb 25

Wall Street Lunch: A Crisis Of Confidence

Summary Consumer confidence dropped sharply in February, with the Conference Board's index falling to 98.3, driven by inflation concerns and labor market pessimism. Growth stocks declined while bonds rallied, with the Nasdaq Composite down over 1% and the 10-year Treasury yield dropping to 4.3%. Tesla's European sales fell 45% year-over-year in January, and Sempra lowered its 2025 earnings guidance due to regulatory and cost challenges. Goldman Sachs' updated hedge fund VIP list features top long positions in Amazon, Meta, Microsoft, Nvidia, Alphabet, and Apple, reflecting smart money trends. Read the full article on Seeking Alpha

Seeking Alpha • Feb 18

QQQ Vs. QQQM: You'll Be In For The Long Run, Hold QQQM

Summary Since my last writing, I am now more concerned about the stubbornness of inflation and also the potential of geopolitical shocks. As such, I do not see an obvious skewness in QQQ return/risk curve in the near future. For long-term holding, I prefer QQQM over QQQ for its lower fees. Its higher yield could further magnify the fee advantage for investors who subscribe to DRIP (dividend reinvestment program). Read the full article on Seeking Alpha

Seeking Alpha • Feb 12

Hedging QQQ With Growth Investor Pro

Summary Growth Investor Pro's Alex King shares why hedging is crucial in volatile markets; using QQQ and PSQ ETFs to protect your portfolio. Mastering a charting method like Elliott Waves and Fibonacci is essential for recognizing patterns and predicting price movements. Leveraged ETF options and learning to over-hedge. Read the full article on Seeking Alpha

Seeking Alpha • Jan 27

It's Trump's Market, And We're Living In It, Market Pushes Up And Consolidates For Next Leg

Summary President Trump's pro-business policies are creating a bullish market environment, but patience is necessary as these policies take time to impact the market. Mid-cap growth stocks, particularly those in the IWP, show strong potential but may need short-term consolidation before further gains. Bitcoin and other cryptocurrencies are in a consolidation phase; Trump's crypto-friendly stance could be bullish but requires Congressional approval for significant impact. Current market conditions favor momentum trading, but caution is advised as some stocks show signs of short-term fatigue and lack of follow-through. Read the full article on Seeking Alpha

Seeking Alpha • Jan 17

QQQ: No Tech Bubble, But Caution Is Necessary

Summary Howard Marks highlights "cautionary signs" in the stock market, including high valuations, AI enthusiasm, and reliance on key stocks like the "Magnificent Seven." While QQQ and S&P500 valuations are above average, they reflect quality premiums and rational growth expectations, avoiding bubble territory. A broad market correction seems unlikely, though select stocks like might face modest valuation adjustments. Read the full article on Seeking Alpha

Seeking Alpha • Jan 10

QQQ: Time To Consider Hedge Via Options

Summary With 10-year treasury rates approaching their 52-week highs, Invesco QQQ Trust ETF's valuation risks heighten. A higher-for-longer scenario could also impact profitability and growth prospects for companies, especially growth-oriented stocks in the QQQ ETF. With these uncertainties, the Fund's volatilities have increased lately. Higher implied volatility makes selling covered calls more attractive, offering more premium income as a downside protection. Read the full article on Seeking Alpha

Seeking Alpha • Jan 03

QQQ: Why Another 83% Tech Crash Should Not Be Ruled Out

Summary The 83% crash in the tech sector from 2000 to 2002 was the result of a negative shift in investor mindsets following a period of "buy at any price". All it would take for a similar size decline today would be for investors to require a similarly large equity risk premium as they did in 2012. Market breadth and bullish sentiment are alarmingly similar to the 2000 peak, indicating the potential for a significant market correction. Put options are a low-cost, high-reward strategy to hedge against a potential large drop in QQQ. Read the full article on Seeking Alpha

Seeking Alpha • Dec 23

Market Pulls Back On The Fed, Heading Down Or Just A Shakeout?

Summary The market pulled back sharply based on the Fed's hawkish 2025 outlook after showing some warning signs the prior week. My strategy involves using clues from the market to engage in tactical trims while using trailing stops on moving averages to lock in profits and manage risk during volatile periods. I remain long several market leading positions after having run a number of stops in the last week. Sharp pullback days are the best time to find the names that market makers are stepping in to defend. This is the best time to work on your watch list. Read the full article on Seeking Alpha

Seeking Alpha • Dec 08

Market Feels Frothy - Ride It While We Can But Be Ready To Get Out!

Summary We are in a momentum market and seeing some great moves in our holdings! But, things look and feel a little frothy, especially in the "growthier" a more speculative names. This is a time to sit and trend stops and be ready to get out when the music stops. I highlight my buy of DXYZ and use this example to discuss how technical analysis works in a broader sense. Read the full article on Seeking Alpha

Seeking Alpha • Dec 02

Holiday Week With Healthy Chop (Technical Analysis)

Summary The market showed healthy digestion this week, a good sign for a potential Momentum Market. A lot of extended stocks - and Bitcoin - were able to chop and pull back but continue to look constructive. My main focus is on waiting for some of the best merchandise to chop out add-on buy levels, but otherwise see some opportunity in the Nuclear and select names. Read the full article on Seeking Alpha

Seeking Alpha • Nov 25

Is This A Momentum Market?

Summary The market put in some healthy digestion of last week's gap down. Under the hood, there are signs we are rotating into more of a Momentum Market as opposed to the Mega Cap dominated market of the last several years. Many momentum names are extended here and need to be chopped out a bit. I plan to trend my stops and carefully deploy capital into the strongest stocks when they set new buy points. Read the full article on Seeking Alpha

Seeking Alpha • Nov 18

More Pullback Than We Wanted

Summary While a pullback after the Election rally was expected, it ended up being a little deeper than expected. However, we saw something similar in 2020, and, on balance, I continue to favor an end-of-year rally. Semiconductor stocks, especially NVIDIA and Broadcom, show weak performance, failing to surpass mid-October highs and dropping below key moving averages. Crypto remains a key focus area. Read the full article on Seeking Alpha

Seeking Alpha • Nov 10

What A Week! Market Poised To 'Trend' For Big Gains! (Technical Analysis)

Summary The market surged after Trump's victory, likely starting a new trending period with strong technicals and favorable end-of-year conditions. However, we are short term extended, and I expect chop or a pullback in the shorter term, providing opportunities to buy leading stocks at attractive points. Momentum traders faced strategic challenges during the election, balancing risk and potential rewards as stocks broke out and gapped up. Keep your watch list ready and well updated. Read the full article on Seeking Alpha

Seeking Alpha • Nov 03

The Momentum Weekly - On The Cusp Of The Election

Summary Bears have taken control of the market in the short term and are throwing up warning signs. However, interpretation is distorted in the run up to the Election. I plan to keep my risk posture high in anticipation of Election volatility. I am underinvested by ready to deploy should the market indicate it is ready to start trending. Bitcoin is a key focus area as it trades on the cusp of an enormous flag. Other areas of interest include Reddit, Tesla, and Roblox. Read the full article on Seeking Alpha

Seeking Alpha • Oct 28

The Momentum Weekly - Market Likely To Declare Itself Soon With Earnings And Election Ahead

Summary The market remains in a period of indecision with upcoming risk events, although it is likely to declare itself over the next two weeks. I am intermediate-term bullish due to the pattern of higher highs and higher lows; until that pattern is broken, I continue to think we are heading toward "trending". Bitcoin looks constructive, potentially benefiting from election-related volatility; I took a cautious position in MicroStrategy as a Bitcoin proxy. Tesla shows strong bullish action post-earnings; I am optimistic but will manage risk and watch for the election's impact. Read the full article on Seeking Alpha

Seeking Alpha • Oct 21

QQQ: An Aggressive Bet On AI Adoption

Summary Invesco QQQ Trust ETF offers strong tech-focused returns, driven by AI adoption and Mag 7 stocks, with a low expense ratio and significant outperformance potential. The ETF tracks the Nasdaq 100 Index, delivering an average annual return of 18.27% over the last decade. An investment in QQQ has widely outperformed an S&P 500 investment. AI-driven productivity gains are key to QQQ's future growth, with companies like Nvidia seeing surging demand for AI accelerators. Despite risks from its concentrated tech portfolio, QQQ remains a top growth investment, ideal for those bullish on AI and technology. Read the full article on Seeking Alpha

Seeking Alpha • Oct 14

QQQ: The Earnings Season Could Burst The Bubble

Summary QQQ is trading at a bubble-like valuation, with PE above 40, and the recent price gains have been due to the PS multiple expansion. The concentration in a few key stocks like Apple, Microsoft, and Nvidia, which account for 25% of the Nasdaq 100, heightens bubble risk. The Gen AI hype is fading and most AI projects fail. Read the full article on Seeking Alpha

Seeking Alpha • Oct 01

The Great Generational Leadership Rotation

Summary Today's market resembles the 2000 tech bubble, driven by tech stocks, declining interest rates, and unrealistic return expectations. Expect a rotation away from large-cap tech stocks towards overlooked sectors like gold, small-cap value stocks, and emerging markets. Inflation and recession fears signal a shift; investing in commodities, miners, and international equities could yield high returns. Rich US market valuations and rising gold prices suggest reallocating from traditional indices to emerging markets and precious metals. Read the full article on Seeking Alpha

Seeking Alpha • Sep 10

QQQ: My In-Depth Look At The Nasdaq-100 Fundamentals

Summary The Invesco QQQ trades at 26.89x forward earnings and 21.29x trailing cash flow. Although these ratios are high, they're still below most other large-cap growth ETFs. QQQ's valuation is at least partially justified, evidenced by its stronger growth, quality, momentum, and sentiment features. This analysis provides supporting fundamental metrics for this conclusion. Risks include downward-trending earnings surprises, which historically have accompanied recessions or value re-ratings, like in 2022. In particular, Nvidia's 5.66% surprise was the lowest since October 2022. QQQ has relied on only a few stocks to drive returns. It's an additional risk, but the grass isn't always greener on the other side. Alternative ETFs often sacrifice quality. In this balanced article, I will evaluate QQQ's fundamentals in depth, and shed some light on the different ways to assess an ETF's valuation. Read the full article on Seeking Alpha

Seeking Alpha • Sep 03

Fed Moves And Election Year Jitters (QQQ Rating Downgrade)

Summary QQQ's strong fundamentals and higher margins justify a "Hold" rating, while SPY's rate sensitivity and growth outlook support a "Buy" rating. Election and upcoming Fed meeting are catalysts; SPY and QQQ trade at high valuations with accelerating growth forecasts. A robust labor market supports consumer spending; SPY is likely to benefit more from rate cuts, while regulatory risks affect SPY more than QQQ. Election-related regulatory risks are temporal; SPY's exposure to financial and industrial sectors makes it more vulnerable in the short term than QQQ. Read the full article on Seeking Alpha

Seeking Alpha • Aug 21

QQQ: What If A Soft Landing Happens?

Summary QQQ's risk premium relative to risk-free rates has subsided noticeably in the past month. Recent macroeconomic data suggest better odds for a soft-landing scenario. A soft landing would benefit other funds beside QQQ, of course. However, my experience is that lower interest rates and steady GDP growth tend to benefit tech-oriented stocks. Read the full article on Seeking Alpha

Seeking Alpha • Aug 13

QQQ Vs. 'Us' After 4 Years: Passive Tech Vs. Active Dividend Investing

Summary I look at how us active dividend investors have done against the mighty QQQ. Our portfolio strategy focuses on buying undervalued dividend stocks, selling overvalued positions, and maximizing dividend income. The Hybrid portfolio has a higher Sharpe ratio than QQQ and S&P 500, indicating better risk-adjusted returns and value added by active management. Total returns for our portfolio are also higher. I look at numerous numbers and details in this article. Read the full article on Seeking Alpha

Seeking Alpha • Aug 06

QQQ: Days Of AI Hype Are Over As Focus Turns To Monetization (Rating Upgrade)

Summary Invesco QQQ Trust ETF experienced volatility with the sell-off in the Mag 7, trading around $445.42 at the time of writing. Investors are more likely to scrutinize returns from investments and question the financial viability of the spending frenzy on AI infrastructure building. Apple's AI features are expected to spur iPhone upgrades, while Nvidia's upcoming earnings report should provide an idea of how AI adoption is broadening beyond hyperscalers. Volatility should persist. Industry research on IT spending and the ability of cash-rich big tech to act as beacons of safety during periods of volatility suggests that the bottom is near and represents a buy-the-dip opportunity. Read the full article on Seeking Alpha

Seeking Alpha • Jul 24

Wall Street Lunch: Bears On Parade

Summary Semiconductor stocks lead Nasdaq decline. AT&T posts strong earnings. Bill Dudley calls for rate cut at next FOMC meeting. Read the full article on Seeking Alpha

Seeking Alpha • Jul 15

QQQ: Benign Rotation Or The Bubble Burst?

Summary The Nasdaq 100 underperformed the Russell 2000 last week as traders sold off the winners and covered the shorts. The trigger was the below expectations CPI report, and the falling inflation usually accompanies the recessions. The QQQ bubble has not busted yet, however, the upcoming earning season could trigger the burst if there are key disappointments by the mega-caps. Read the full article on Seeking Alpha

Seeking Alpha • Jul 08

Buying Puts On QQQ

Summary The current bull market has finally persuaded me to start buying some insurance for the eventual rainy days. The reason I am not buying puts for ATM (At-the-Money) options is it’s psychologically not challenging to go through ~10-20% drawdowns. My general framework is to have puts whenever QQQ trades at above >30x LTM EV/EBIT multiple. Read the full article on Seeking Alpha

Seeking Alpha • Jun 24

QQQ: Bumpy Short-Term Ride Possible (Rating Downgrade)

Summary QQQ Trust ETF might have seen a nice increase so far in 2024, but the risks have risen in line with rising valuations. Among its top 10 constituents, only four are now trading at lower PE multiples than their five-year averages. Of these, there's only a small difference for Alphabet, and Tesla can see further downside. Amazon still has positive potential, and with a more prominent communications sector and less significant consumer discretionary, QQQ can still see some upside. But a pullback is increasingly likely. Read the full article on Seeking Alpha

Seeking Alpha • Jun 12

QQQ: Almost Time For A Breather

Summary Invesco QQQ Trust ETF has started to outperform the broader market again, similar to last summer. The top stocks within QQQ are not excessively overvalued, as earnings growth has kept up with price appreciation. Although QQQ is due for a pullback, technical indicators and seasonality suggest waiting before selling the ETF or buying puts. An extended period with the RSI in the overbought zone above 70 and new highs in the month of July would be a more likely place for a pullback to start. Read the full article on Seeking Alpha

Seeking Alpha • May 27

QQQ: I Was Wrong (Rating Upgrade)

Summary A year ago I wrote an article on the Invesco QQQ Trust ETF, explaining why I had sold the fund. Basically I found the NASDAQ-100 index to be overpriced. Ultimately I ended up being wrong about the fund's growth potential. The QQQ stocks regained their growth and many remain good buys. I hold Google stock to this day. In this article I explain why I upgraded my QQQ trading to buy. Read the full article on Seeking Alpha

Seeking Alpha • May 12

QQQ: Macro Trends Favor Non-Tech Areas, Bullish Seasonal Trends

Summary S&P 500 Q1 earnings growth is close to 10% thanks to mega-cap tech companies, but NVIDIA is yet to report. Weaker-than-expected US data could lead to a Fed rate cut, benefiting sectors away from tech-focused sectors that dominate the Nasdaq 100 ETF. QQQ's sector valuation is high, and sector rotation suggests it may not be best positioned for relative gains. I concede that QQQ's seasonality is bullish today, and I highlight key price levels on the chart to monitor in the months ahead. Read the full article on Seeking Alpha

Seeking Alpha • Apr 13

QQQ: The Big Tech Is Fundamentally Vulnerable

Summary The big tech firms, accounting for 45% of QQQ, are facing serious threats, either due to regulations, antitrust issues, or AI-related disruptions. The macro situation is deteriorating, given the Fed's inability to preventively cut interest rates to avoid the incoming recession. The momentum is also weakening, as QQQ has been flat for 6 weeks, facing a major technical breakdown with a 10% correction. Read the full article on Seeking Alpha

Seeking Alpha • Mar 22

Invesco QQQ Trust ETF: Short-Term Momentum Is Coming To An End

Summary Invesco QQQ Trust ETF has outperformed the broader equity market and other growth funds, delivering a 44% return over the past year. This performance, however, has brought the QQQ ETF to unsustainable levels, and this will weigh on returns through the rest of 2024. Share prices of QQQ's major holdings enjoyed two concurrent tailwinds that are now largely exhausted and could be subject to reversal over the coming year. Read the full article on Seeking Alpha

Seeking Alpha • Feb 27

QQQ: The Nasdaq Has Entered The Matrix As 'The One' Arrives

Summary The Nasdaq 100 has surged 6.6% in 2024, driven by five stocks: Nvidia, Meta, Microsoft, Amazon, and Broadcom. Tesla and Apple have experienced sharp declines, subtracting 212 points from Nasdaq gains. The surge in these stocks is attributed to optimism about the future of AI. Read the full article on Seeking Alpha

Seeking Alpha • Feb 21

SPDR S&P 500 ETF And Invesco QQQ Trust: Almost All Investors Are Crowded Into The Same Side Of The Boat

Summary Passive funds account for over 50% of all assets and 60% of domestic equity funds, with passive fund flows even greater, leading to market euphoria. The combination of passive flows, volatility suppression trades, gamma call squeezes, 0DTE options, and futures positioning is fueling the market melt-up. Despite all the hoopla and hype, the Invesco QQQ Trust and the SPDR S&P 500 ETF are significantly underperforming energy and material investments since the March 23rd, 2020, pandemic low. Read the full article on Seeking Alpha

Seeking Alpha • Feb 11

QQQ: Collection Of Best Ideas

Summary The Invesco QQQ ETF is a collection of best ideas with fast-growing and profitable companies rising to the top and displacing mature lower-growth ones. The QQQ has consistently beaten the S&P 500 post Dot Com implosion. The current portfolio has strong revenue growth, increasing net margins, and a 21% EPS growth rate. Valuation: While high at 30x PE YE24 is not absurd relative to EPS growth at a 1.8x PEG. Read the full article on Seeking Alpha

Seeking Alpha • Jan 17

QQQ: Reaching For A New High (Technical Analysis)

Summary Invesco QQQ Trust ETF is starting the year strong, bouncing back after a short dive to test support. The QQQ ETF daily chart shows recent pullback and underperformance, while the weekly chart shows consistent uptrend and outperformance. Buy signals remain on both charts due to strong earnings, a good economy, and the potential of AI. Read the full article on Seeking Alpha

Seeking Alpha • Jan 10

QQQ Is Getting Overpriced, But It's Still A Hold (Upgrade)

Summary The Invesco QQQ Trust has performed well, but buying it at extreme highs has resulted in severe, prolonged negative returns. Buying the NASDAQ-100 at its highest point in 1999 resulted in a 15-year breakeven period--as bad as the Dow in 1929. The NASDAQ-100 index is currently priced at high valuation multiples, indicating that it may be overvalued. At the same time, the fund's highly innovative and dynamic constituents often beat earnings, due to technological factors not well captured in DCF models. For this reason I consider the fund a hold, even though conventional financial analysis techniques point to it being a sell. Read the full article on Seeking Alpha

Seeking Alpha • Oct 13

QQQ: Positioning For A Major Breakdown

Summary The major long-term breakdown is possibly in progress. The odds of the 1987-like selloff are increasing. The Fed-induced liquidity shock is the main trigger.

Seeking Alpha • Oct 03

QQQ: The Tech Crash, Where Is The Bottom (Technical Analysis)

Summary The tech heavy NASDAQ 100 is down by over 33% YTD. The continuation of the tech crash to a 50-75% drawdown is unlikely. These are not indications of a credit crunch (like in 2008) nor an irrational bubble burst (like in 2000). QQQ down by over 33% YTD The tech-heavy NASDAQ 100 (the tech sector is nearly 48% of the Index), as proxied by the Invesco QQQ ETF (NASDAQ:QQQ), is down by over 33% during the first 9 months of 2022. This would qualify as a tech crash, even though it doesn't feel like it sometimes. Here is the QQQ screenshot from Seeking Alpha: Seeking Alpha I mainly covered the S&P500 (SPY) this year, but I did issue a sell recommendation on QQQ on September 6th. Even since then, QQQ is down by 9% - September was a difficult month, as I expected. My sell recommendation on Sep 9th was based on the observation that tech stocks were still overvalued. Given the Fed's objective of a "growth recession," it was very likely that we would get earnings downgrades and further valuation multiple contractions. I even recommended a sell on Apple (AAPL), the most heavily weighted stock in QQQ (almost 14% of the index), which decreased by over 12% since. So, what's next for QQQ? Surprisingly, even after the 33% crash, the longer-term bull market in Nasdaq 100 is technically still in place, based on the long-term trend. However, we are at the key support, the 200-week moving average, which held even during the March 2020 crash, (the black line in the graph below). In fact, we closed on Friday just below it. Barchart Thus, NASDAQ 100 is currently at the crucial level. So, what happens next for QQQ? There are 3 possible scenarios as I see it: The tech crash continues with the 200wma breakdown, towards the 2008-like or the 2000-like 50%-75% crash. The QQQ find the short-term support and rallies towards the 100wma (red line) in a bear market rally. We are currently at a longer-term bottom for QQQ, and the new bull market is about to commence. Note, allow for additional drawdown up to 5% in this scenario as the bottom is processed. Let's evaluate the probability of scenario 1 or the crash continuation to over 50% total drawdown. Obviously, by ruling out the scenario 1, the implication would be that QQQ would rally from here, at least for a short period. How likely is a 2000-like tech crash? First, let look at the 2000-crash similarities. The 2000-crash was the dot-com bubble crash, where investors irrationally priced the dot-coms and related companies, many of which had no earnings. As a result, the forward P/E ratio for NASDAQ 100 was over 100 in 1999. Today, the forward P/E ratio for NASDAQ is only 20. Also, last year the P/E ratio was "just 34," which was expensive, but not at the point where we can say an irrational bubble. Furthermore, NASDAQ 100 is currently fairly priced. Thus, it is unlikely that we have the valuation based 2000-like bubble burst on our hands. Thus, I rule out the 2000-like continuation of the tech crash. How likely is a 2008-like tech crash? Second, let's evaluate to 2008-like similarities. The 2008 crash was essentially the credit crunch, primarily caused by the Lehman Brothers bankruptcy. In 2008, the housing bubble was at the heart of the problem, and financial institutions held the "toxic waste" assets on and off their balance sheets, and nobody could tell which financial institution would go bankrupt next. The credit risk spreads today are low/moderate, which indicates little fear of the credit crunch. Here is the spread between the BBB rated corporate bonds yield and the 10Y Treasury Bond yield. The current value is 2.27%, which is only moderate based on the historical values, and it would have to spike to above 3% to become worrisome. FRED Yes, the housing market is currently correcting, but we don't have the similar problem with the ARM mortgages and the subprime mortgages like in 2008. Thus, I don't anticipate the credit crunch like in 2008, and thus rule out the 2008-like tech crash continuation. What else can cause a NASDAQ crash continuation? Every crisis is different. Yet, all stock market selloffs always happen due to: 1) a liquidity shock, 2) a deep recession, or 3) a credit crunch. In addition to these variables, there is always the risk of an extraordinary geopolitical event, or other internationally related crisis. The QQQ selloff YTD was due to the Fed-induced liquidity shock, as I warned during the first half of the year. Specifically, I warned that "the Fed will talk the talk and walk the walk," and that the stock market was 40-50% overvalued. Those were the reasons to sell stocks earlier this year, but most of them are priced in now. As previously stated, we are likely at the peak Fed hawkishness. Additionally, the mild-to-modest upcoming recession, with the unemployment rate climbing to up to 4.4% is likely priced in, given the forward P/E ratio of 20. Yes, there could be some additional selling, but nothing like in 2000 or 2008. In addition, as previously mentioned, it is unlikely that the Fed would allow additional domestic Lehman Brothers bankruptcy, and the current macro environment is nothing like in 2008. Yet, the geopolitical situation is currently very tense with the war between Ukraine and Russia, and the probability of a nuclear war is definitely above 0%. Furthermore, the relentless rise of the U.S. dollar is increasing the probability of the 1997-like crisis "somewhere."

Seeking Alpha • Sep 19

QQQ: Summer Glory To Fade Off In Fall Obscurity?

Summary In this note, we will discuss recent price action in Invesco's QQQ ETF, along with the factors driving this action. Furthermore, I share a fresh outlook for the QQQ now that my call for a retest of June lows is looking nailed on to materialize. I rate QQQ 'Neutral' at $290. Introduction: Where Do We Stand? Invesco's QQQ (QQQ) is an exchange-traded fund that tracks the tech-heavy Nasdaq-100 index. After a scintillating summer rally off of June lows, tech stocks and equity markets, in general, have resumed their downtrend. The last time I wrote on QQQ was back in early June, and here's what I said at the time: In the near term, I see QQQ running up to the $320-330 range, but over the medium term, we are likely to decline to $250-260. These targets are based on fundamental, quantitative, and technical analysis shared in today's note. With a near-term upside of 3-8% and a medium-term downside of ~20-25%, I'm not too fond of QQQ's risk/reward here. Therefore, I am neutral on QQQ at current levels. Source: Is QQQ A Buy Or Sell During The Dip? It's Complicated After initially dipping to ~$270 by mid-June, the QQQ went on a smashing rally to reach the $335 level by mid-August. On 15th August 2022, I wrote the following in my newsletter: A series of higher highs and higher lows seem to reflect a strong bullish reversal; however, below-average trading volumes are unnerving. We are close to a resistance zone in the $335-345 range, and on the weekly chart, QQQ is testing the top end of the falling wedge pattern we have traded in for the last nine months. A rejection from this zone could quite easily trigger a retest of June lows. Source: TQI Weekly - Issue #5: A New Bull Market Or Just Another Bear Market Rally QQQ's chart as of mid-August (WeBull Desktop) Now, I am not sharing this history to showcase some extraordinary ability to predict the stock market. Instead, I strongly believe that nobody knows where the market is going in the near term. All we can do is analyze the fundamental, quantitative, and technical data to get a better understanding of what could happen in the market. And then orient our investing operations to benefit from this probabilistic understanding of the market environment. Sticky inflation, rising interest rates, hawkish monetary policy, and slowing economic activity do not portend strong equity market returns for the foreseeable future. On Tuesday, the CPI inflation print came in hotter-than-expected at 8.3%, surprising market participants betting on a drop off in inflation. However, on the ground, inflation is slowing down [e.g., prices at the gas station are down significantly in recent weeks, home prices are declining, used auto prices are way off their peak, and there are many other instances]. Now, the lagging rents data (~30-40% of CPI) is set to make the headline inflation numbers look bad for some time to come. While renowned investors like Ray Dalio and Jeff Gundlach called out the rising probability of a recession during this week (and predicted another 20-25% decline in S&P500), the Fed seems to be focusing on countering inflation - moving full steam ahead with its quantitative tightening program. The expectations for the Fed's September meeting (on 21st and 22nd) are now pointing toward a 75-100 bps hike in the federal funds rate, and the bond market seems to be pricing in more hawkishness from Fed chair Jay Powell, as treasury rates continue to shift up rapidly. YCharts Legendary investor Warren Buffett's quote comes to mind: Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices. The most important item over time in valuation is obviously interest rates. As interest rates have shot up in 2022, equities have been getting re-rated lower, and after a 28% YTD decline, the P/E ratio for Invesco's QQQ ETF (QQQ) [an ETF tracking Nasdaq-100 index] has come down to ~22-23x. Looking at historical data from the past ten years, the QQQ seems like a no-brainer buy at around 20x earnings. GuruFocus However, persistently-high inflation, rising interest rates, and slowing economic activity (amidst waning consumer confidence) are significant threats to corporate earnings and the valuation multiples attached to these earnings. Honestly, earnings may be the next shoe to drop in this market cycle, and Q3 & Q4 could bring a lot more volatility to the equity markets. A Look At Some Recent Market Action Broad market indices [S&P500 (SPX), Nasdaq-100 (NDX), and Dow Jones Industrial Average (DIA)] got off to a strong start in September; however, volatility returned to Wall Street last week. On Tuesday, stocks took a tumble (SPY down ~4%, QQQ down ~5%) as inflation data came in hotter-than-expected - raising expectations of a 75-100 bps rate hike by the Fed at its September meeting and even more hawkishness from the Fed. After a couple of benign days on Wednesday and Thursday, the sell-off resumed on Friday, with all major indices closing in the red. With the Fed tightening into a slowing economy, the fears of an economic recession are growing. YCharts At my recently launched marketplace service, The Quantamental Investor, we saw our GARP & Buyback-Dividend portfolios experience a negative ROIC of -1.42% and -1.54% over the last two weeks, with a big chunk of weakness coming from a sell-off in large to mega-cap tech stocks. Interestingly, the performance of small to mid-cap (higher growth) companies was superior to that of their larger counterparts. As of the close on Friday, TQI's Moonshot Growth portfolio had an ROIC of +3.76%, which was better than iShares Russell 1000 Growth ETF's (IWF) return of -1.86%. Portfolio Return On Invested Capital (%) Portfolio Return to Date (%) GARP -1.42% -0.75% Buyback-Dividend -1.54% -0.79% Moonshot Growth +3.76% +1.84% At TQI, our playbook for this bear market is - Build long positions slowly and manage risk proactively.

Seeking Alpha • Sep 12

Why REITs Will Trounce QQQ In A High Interest Rate Environment

Summary We look into the actual mechanism by which interest rates impact the economy. REIT growth increases as interest rates rise, as acquisitions are based on a cap rate that floats with interest rates. Tech growth decreases because ROIC is static while costs rise. I have frequently discussed that the Nasdaq is more susceptible to rising rates than REITs. This is largely consensus, as it just boils down to the math of discounting their future earnings back to present value at a now higher discount rate. Real estate's cash flows are closer to the present because they are making money today and in the future, whereas tech companies tend to have more future weighted cash flows. In addition to higher discount rates hurting the Invesco QQQ ETF (NASDAQ:QQQ), today, I want to discuss a different angle on it - the mechanism by which higher interest rates impact the economy. More specifically, higher interest rates are going to increase growth rates in certain types of companies and hurt growth rates in others, depending on the nature of their projects. The types of projects Nasdaq companies engage in will not become higher return while other areas such as financials and real estate do become higher growth. The mechanism with which higher interest rates impact the economy The past 10 years have been an unusual time, with interest rates spending a majority of it at historic lows. This has been a great time for the Nasdaq until recently when interest rates rose substantially. As you can see below, QQQ fell in tandem with 7-10 year bond prices, which of course fall when yields go up. SA So what actually changes when interest rates rise? Cost of debt rises Cost of equity rises Opportunity cost rises The first two are obvious and well-known. It is the third on which I want to dig deeper. At any given time, there are countless places in which one can park capital. It can be anything from investments to developments or new business lines - anything in which one invests money to try to generate a return on that money. Some projects are better than others due to either having lower risk or higher return. Companies can invest in zero, one or many of the projects available to them. Back when equity prices of tech stocks were through the roof and interest rates were near zero, the tech company could invest in just about any project and have it be profitable. The opportunity cost was low. Even 3% return on capital projects could potentially be used to spur growth. Today, opportunity cost is much higher. Anything under ~5% return is not profitable and anything under ~8% is only viable if the risk is quite low (certainty of return is high). The exact cutoffs will vary from company to company, but essentially what has happened is that the set of viable projects has been shrunk materially. All the medium to low return projects that used to be viable sources of growth are simply not valid today. The throw capital around and see what sticks approach won't work anymore. Even the high-return projects are less profitable than they used to be because the costs associated with the capital are higher. More shares have to be issued to get the same amount of equity capital or more interest has to be paid on debt capital. The 8% ROIC (return on invested capital) project that used to be funded 50/50 debt and equity with 2% cost debt used to have a 14% ROE (return on equity) and the equity could be raised at 4% dilutive cost. Today, that same 8% ROIC project is funded with 5% cost of debt making it an 11% ROE and that is funded with 6% cost of equity. Clearly, there is less growth from this project. Why this hurts tech more than real estate So in the example above, the reason spreads came in so much is that costs increased, but the ROIC stayed the same. That is not always going to be the case. In many sectors, ROIC floats with broader economic conditions such that investment spreads are as accretive or potentially more accretive with higher interest rates. Tech, for the most, part does not have floating ROIC and that is why it is hurt so much more by rising interest rates. What sorts of investments have fixed ROIC? For ease of example, let us consider Netflix (NFLX) as its projects are easy to understand. Netflix can invest X amount of dollars into a new series and that new series is going to attract Y number of new subscribers. Thus, the ROIC of the project is related to the cost to produce that show relative to the revenue from the new subscribers. Let me ask you to ponder the following question: Do higher interest rates increase the number of subscribers the show will generate? I think it is a clear no. One could even make the argument that the economic slowing from higher interest rates would marginally decrease the number of new subscribers, but for the purposes of illustrating the concept, let us say the number of subscribers is the same. If the subscriber number is the same, the return of the project is the same. This is a clear example of the type of project that has fixed ROIC with regard to interest rates. (note that the costs and revenue per subscriber could go up from inflation, but we are looking at interest rates as an isolated variable here). This sort of fixed ROIC project gets strictly worse in a higher interest rate environment. The same returns, but against higher cost of equity and higher cost of debt. What sorts of investments have floating ROIC? Real estate acquisitions are based on cap rates. As you know, a cap rate is the net operating income (NOI) of a property divided by purchase price. The NOI is a known quantity. It can be calculated by the rental revenues less expenses (with amortization of future expenses). NOI is the independent variable Price is the dependent variable Price is usually determined at the point of transaction by the cap rate the market is demanding. A property has $100 of NOI. The prevailing cap rate is 8% for this type of property so therefore it will be priced at $1250 ($100 NOI/$1250 = 8% cap rate). When interest rates were low, real estate buyers only demanded 4%-7% cap rates, depending on the type and quality of the real estate. As interest rates rise, property buyers will demand higher cap rates. There is usually a lag, but cap rates will generally follow interest rates in a parallel fashion.

Seeking Alpha • Sep 06

QQQ: Growth Recession Should Crush Growth Stocks (Technical Analysis)

Summary The Fed abandoned the soft-landing policy in favor of growth recession. The "growth recession policy" requires the earnings expectations downgrade, as well as the valuation multiple contraction. Growth stocks are still overvalued, and likely to continue to selloff in the upcoming growth recession environment. The post-summer rally blues I wrote an article on July 12th, where I suggested that Invesco QQQ ETF (QQQ) is potentially ripe for the summer rally, pending the technical breakout above the 50dma, supported with the falling CPI inflation thesis: QQQ is at the important resistance, and the break above the 50dma is likely to propel the index towards to 200dma...given the correction in oil prices, as well as prices of other commodities, it is likely that the headline CPI could surprise to the downside - which could be the trigger to push the QQQ over 50dma and propel the summer rally. Thus, at this point, I recommend the hold on QQQ, but the 50dma breakout with the downside surprise in the headline CPI on July 13 will trigger the tactical buy. Will update accordingly. I never updated the QQQ summer rally call because I specifically focused on SPY, where I issued the buy rating on July 18th, with the key bullish argument that "the liquidity risk is receding because we are (finally) past the peak Fed hawkishness." However, QQQ did break the 50dma resistance, which triggered my bullish scenario, and subsequently sharply rose towards the 200dma - a move that will be known as the summer rally of 2022. Here is the QQQ chart that shows the 50dma breakout in late July: QQQ data by YCharts The chart above also shows that the summer rally faded near the 200dma resistance and reversed. In fact, the peak of the summer rally coincides with SPY reaching the 200dma resistance, which is why I focused on SPY rather than QQQ analysis. In fact, I reversed my bullish call for SPY summer rally on Aug 15th, and re-rated it as a sell, citing several fundamental issues facing the stock market in September (the doubling of the QT, the likely inversion of the 10y-3mo curve, and potentially higher CPI reading). The "growth recession policy" stops the music However, the key negative fundamental trigger for stock market came on August 26th with the Fed Chair Powell speech at the Jackson Hole Economic Symposium (emphasis added): Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy. Committee participants' most recent individual projections from the June SEP showed the median federal funds rate running slightly below 4 percent through the end of 2023. Participants will update their projections at the September meeting. Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain. The Fed Chair Powell indicated that the Fed changed the initial policy of soft-landing (whereby the Fed would possibly pause the hiking cycle to evaluate the effect of past interest rate hikes on the real economy) to something defined as a growth recession. The term “growth recession” was first mentioned in 1972 by Solomon Fabricant, a professor at New York University. It is basically defined as "a prolonged period (more than one quarter) of significantly below trend real GDP growth."

Seeking Alpha • Aug 26

QQQ: An Excessive Bust Is Coming

Summary QQQ tracks the hottest stocks in the world, American technology and the Nasdaq 100. George Soros coined the boom-bust model, in which he explained that excess on the upside often leads to excess on the downside. Looking at the fundamentals of QQQ, it could get ugly. In the decade ahead, we project returns of 4% per annum. The Thesis At the end of 2021, the Invesco QQQ ETF (QQQ), which tracks the Nasdaq 100, reached a PE of 39 and a cyclically adjusted PE (CAPE ratio) of 60. Legendary investor George Soros has believed for many years that excess on the upside leads to excess on the downside. QQQ could fall much, much further as the excess drains out of its valuation. History has shown that when the CAPE ratio reaches 60, real returns for the following 15 years settle around negative 4% per annum: CAPE Ratio Vs. Real Returns (Lyn Alden) All Aboard The Hype Train If there's one thing that's worked over the past decade, it was holding U.S. tech stocks. Thus, the outperformance of QQQ, which has 50% of its holdings in information technology and another 30% or so in communication and consumer tech. QQQ's Sector Allocations (Invesco) Invesco advertises this ETF by pointing out its track record of outperformance and its trading volume: QQQ ETF (Invesco) The problem is, tech stocks outperformed massively before the dot com bubble burst. Following the implosion of 2000, it took more than 15 years for the Nasdaq 100 to recover its losses: QQQ data by YCharts In fact, the reason QQQ has outperformed over the past 15 years is because tech underperformed from 2000 to 2010, in my opinion. This meant there were huge bargains in the sector as everyone was depressed about tech stocks. So you can see, you don't want to buy what's done well recently, in fact, you want to do just the opposite. We've studied several investors who outperformed the market over multiple decades, from Warren Buffett, to Carl Icahn, to Sir John Templeton, to Howard Marks. They all had one thing in common, they bought when there was blood in the streets. QQQ is concentrated in the hottest sectors of the past 5 years, and that's not where you want to hunt for outsized returns: Sector Performance (Fidelity) The average S&P 500 company survives only 20 years, and for tech stocks, that lifespan could be even shorter as these businesses face brutal competition, and the industry is constantly changing. If we look at businesses that survived for more than 200 years, we get banks like JPMorgan Chase (JPM), chemical companies like DuPont (DD), and consumer staples companies like Colgate-Palmolive (CL). These are simple and predictable businesses in industries that enjoy a very slow pace of change. It's About To Get Ugly QQQ's Top 10 Holdings QQQ's Top 10 Holdings (Invesco) We've analyzed many of QQQ's top holdings individually, including Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Tesla (TSLA), Google (GOOG) (GOOGL), Meta (META), and Costco (COST). Marked in red above are our expected annual returns for each business, with a 10-year time horizon. Overall, this equates to a 4% expected annual return for QQQ's top holdings. In other words, you could get an inflation adjusted return of 0% per annum holding these stocks. History has shown the market tends to swing from overly optimistic to overly pessimistic. Legendary investor George Soros coined this the boom-bust model. He believed that excessive margin, speculation, and exuberance on the upside creates excessive insolvency, fear, and selling on the downside. In other words, the larger the boom, the larger the bust. So, what do you think comes next for QQQ? If we had to wager, we'd bet on an excessive bust. Risks To The Thesis Crazy things can go on longer than you expect. In 1989, the PE of the Japanese index reached 60x earnings. The Nasdaq 100 is still nowhere near this level. Enthusiasm can always return in the short-run. Also, while Sir John Templeton has cautioned against saying "this time is different," he conceded that 20% of the time it really is different. Technology stocks have defied gravity up to this point. And, holding a diversified group of technology stocks with a 30-year time horizon isn't a terrible idea. We've seen many of these businesses develop enduring moats and compound at a rapid pace for an extended period of time. An asset-light model and rapidly growing industry is generally a good place to be. Technology should be a part of everyone's portfolio, at the right valuation. Our Valuation The Nasdaq 100 has a PE ratio of 27.2, but its earnings could still be at a cyclical peak, as evidenced by its much higher CAPE ratio. This means QQQ likely has earnings per share around $11.78. Looking at the aggregate of several QQQ businesses we've analyzed, combined with the cheaper, but slower growing businesses that round out the QQQ ETF, we believe EPS will grow at 8% per annum in the decade ahead. This growth should outpace the S&P 500's EPS, but the valuation is more stretched than the S&P. Our 2032 price target for QQQ is $445 per share, implying returns of 4% per annum with dividends reinvested.

Seeking Alpha • Aug 14

QQQ: The Stock Market Rally Is Not The Start Of A New Bull Market

The NASDAQ 100 and QQQ have rallied by more than 20%. The rally has sent the ETF into overvalued territory. These types of rallies are not unusual in bear markets. The NASDAQ 100 ETF (QQQ) has seen an explosive short-covering rally over the past several weeks as funds de-risk their portfolios. It has pushed the QQQ ETF up nearly 23% since the June 16 lows. These types of rallies within secular bear markets are not all that uncommon; rallies of similar size or more significance have occurred during the 2000 and 2008 cycles. To make matters worse, the PE ratio of the NASDAQ 100 has soared back to levels that put this index back into expensive territory on a historical basis. That ratio is back to 24.9 times 2022 earnings estimates, pushing the ratio back to one standard deviation above its historical average since the middle of 2009 and the average of 20.2. Bloomberg On top of that, earnings estimates for the NASDAQ 100 are on the decline, falling roughly 4.5% from their peak of $570.70 to around $545.08 per share. Meanwhile, the same estimates have risen just 3.8% from this point in time a year ago. It means that paying almost 25 times earnings estimates is no bargain. Bloomberg Real yields have soared, making the NASDAQ 100 even more expensive compared to bonds. The 10-Yr TIP now trades around 35 bps, up from a -1.1% in August 2021. Meanwhile, the earnings yield for the NASDAQ has risen to around 4%, which means that the spread between real yields and the NASDAQ 100 earnings yield has narrowed to just 3.65%. That spread between the NASDAQ 100 and the real yield has narrowed to its lowest point since the fall of 2018. Bloomberg Financial Conditions Have Eased The reason the spread is contracting is that financial conditions are easing. As financial conditions ease, it appears to cause the spread between equities and real yields to narrow; when financial conditions tighten, it causes the spread to widen. Bloomberg If financial conditions ease further, there can be further multiple expansion. However, the Fed wants inflation rates to come down and is working hard to reshape the yield curve, and that work has started to show in the Fed Fund futures, which are removing the dovish pivot. Rates have risen dramatically, especially in months and years beyond 2022. Bloomberg But more importantly, for this monetary policy to effectively ripple through the economy, the Fed needs financial conditions to tighten and be a restrictive force, which means the Chicago Fed national financial conditions index needs to move above zero. As financial conditions begin to tighten, it should result in the spread widening again, leading to further multiple compression for the value of the NASDAQ 100 and causing the QQQ to decline. This could result in the PE ratio of the NASDAQ 100 falling back to around 20. With earnings this year estimated at $570.70, the value of the NASDAQ 100 would be 11,414, a nearly 16% decline, sending the QQQ back to a range of $275 to $280. Not Unusual Activity Additionally, what we see in the market is nothing new or unusual. It occurred during the two most recent bear markets. The QQQ rose by 41% from its intraday lows on May 24, 2000, until July 17, 2000. Then just a couple of weeks later, it did it again, rising by 24.25% from its intraday lows on August 3, 2000, until September 1, 2000. What followed was a very steep selloff. TradingView The same thing happened from March 17, 2008, until June 5, 2008, with the index rising by 23.3%. The point is that these sudden and sharp rallies are not unusual.

Seeking Alpha • Aug 05

SOXX Vs. QQQ: Time To Consider Heavier Bets On Tech

Many investors are familiar with the Invesco QQQ ETF and use it as a convenient vehicle to gain exposure to the tech sector. However, many investors are unaware that QQQ is not a pure-tech play, probably not even a primary tech play. Stocks in information tech represents less than 50% of its asset, a minor majority. This article, therefore, compares QQQ to other pure-tech ETFs such as the iShares Semiconductor ETF so investors have a broader range of options. There are good reasons to consider betting heavier on tech now, given their valuation correction and quieter volatility. Thesis Recent price corrections have brought tech valuations to a more reasonable range. The iShares Semiconductor ETF (SOXX) has historically been traded at a premium relative to the overall market. For example, back in March 2022, SOXX was trading at a P/E of about 31.5x and SPDR S&P 500 Trust ETF (SPY) at about 26.5x according to Yahoo Finance data. However, recent corrections have brought SOXX P/E to the current level of 15.45x, about a 17% discount from the S&P 500’s 18.4x. And you will see next that the discount from the NASDAQ 100 index, represented by the Invesco QQQ ETF (QQQ), is even larger. To wit, SOXX suffered a total loss of 18.6% YTD and QQQ about 22% as you can see from the following chart. Combined with earnings changes, the valuation of SOXX now stands at 15.45x and QQQ at 22.01x, a discount of almost 30%. Besides the valuation compression, the volatility has also become much quieter recently, adding another reason for considering a heavier bet on the tech sector. As you can see from the second chart below, the volatility index has subdued substantially YTD, decreasing from the 30+ level routinely seen at the earlier part of the year to the current level of 22.4x. To provide broader context, a volatility of 30 is at the top 93% percentile of historical volatility. While 22 is at about 71% percentile. The major reason for the quieter volatility is Fed’s recent rate movements and comments, which are consistent with market expectations and also provide clarity for the near term. And as detailed in our earlier article, when volatility is high, it’s a good idea to hunker down and vice versa. Against this backdrop, we will look at the pros and cons of SOXX and QQQ more closely next. Seeking Alpha Yahoo Finance SOXX vs QQQ: basic information QQQ needs little introduction. It is one of the most popular funds tracking the Nasdaq-100 Index. However, as aforementioned, many investors are unaware that QQQ is not a pure-tech play because the NASDAQ 100 index tracks the largest NON-FINANCIAL companies listed on the Nasdaq and many of these companies are not tech companies. I will table this for now and come back to this point later. SOXX, in contrast, is a pure tech play completely concentrated in the semiconductor sector. As detailed in the fund description: The iShares Semiconductor ETF seeks to track the investment results of an index composed of U.S.-listed equities in the semiconductor sector. It provides exposure to U.S. companies that design, manufacture, and distribute semiconductors and targeted access to domestic semiconductor stocks. It is used to express a sector view. Source: ETF.com SOXX vs QQQ: Past performance and risks Both the SOXX and QQQ funds have delivered handsome returns in the past as you can see from the chart below. SOXX has delivered an annual return of 10.12% since its inception in 2022, and QQQ has delivered a slightly higher CAGR of 11.5%. Both outperformed the S&P 500 by a good margin of about 2% to 3%. When compounded over the past decade, such an alpha has accumulated into a sizable difference in total return. With dividends reinvested, SOXX has delivered a total return of 720% and QQQ more than 930%, far higher than the S&P 500’s 525%. Although the downside is their price volatilities. We’ve already seen a glimpse of their price volatility in the short term in the previous section already in the past year. As you can see in the long term, both SOXX and QQQ have suffered much larger volatility than the S&P 500 too. And SOXX in particular has suffered by far the largest volatility. In terms of standard deviation, it's 27% is almost double that of the SP 500 (14%) and has also been higher than QQQ by about a whole 8%. In terms of worst-year performance, SOXX suffered a 51% loss (which will take more than a 100% rally to breakeven), which was 10% more than QQQ and 14% more than SP 500. And finally, in terms of maximum drawdown, SOXX’s 62% maximum drawdown (which takes a 163% rally to break even) is truly nerve-wracking. In contrast, both QQQ and SP 500 were in the 50% range. And next, we will see that the root cause of the volatilities is in their fundamental indexing methods. Portfolio Visualizer SOXX vs QQQ: More concentrated bet on Tech As aforementioned, QQQ tracks the largest NON-FINANCIAL companies listed on the Nasdaq and many of these companies are not tech companies. As you can see from the chart below, information technology represents 49.8% of QQQ’s total assets, followed by communication services at 17.7%, and consumer discretionary at 14.9%. Admittedly, some of the companies in communication services and consumer discretionary are also tech companies. Nonetheless, information technology only represents a minor majority of the farm. Note that QQQ also holds a good portion of consumer staples, healthcare, industrials, and utilities. SOXX and QQ fund fact sheets SOXX, in contrast, is a pure tech play. The fund is completely invested in the tech sector, especially the semiconductor sector. As you can see, it invests more than 79.1% of its total assets in semiconductor stocks and more than 20.6% in semiconductor equipment. Furthermore, its holdings are also more concentrated. SOXX holds a total of 32 stocks and QQQ about 100. You can also see the concentration and composition more vividly by looking at their top ten holdings. One of their top 10 holdings overlaps: Nvidia (NVDA). But NVDA represents an 8.3% allocation in SOXX, in contrast to only 3.28% in QQQ. Also note that QQQ’s top holdings include stables like Costco (COST) and PepsiCo (PEP), while all SOXX holdings are semiconductor stocks. To me, this is key for SOXX’s long-term performance. It places concentrated bet one of the most innovative sectors: information technologies. For this reason and the current valuation, I see favorable odds for SOXX to keep outperforming S&P 500 in the long term. I also see good odds for it to outperform QQQ too, as to be detailed next.

Seeking Alpha • Jul 21

QQQ: The Next Leg Higher Will Be Painful For Bears (Technical Analysis)

The market trading action has turned positive with QQQ breaking out above $300. We see a sustained rally in tech and growth names going forward through a "peak inflation" and "peak Fed hawkishness" narrative. This article highlights an attractive trade setup in the QQQ ETF positioned for more upside. The NASDAQ-100 (QQQ) has rallied more than 13% from its cycle low and gaining momentum approaching key technical levels. We see the next leg in the market as higher based on several shifting dynamics. Record inflation, Fed rate hikes, and poor consumer sentiment are no problem here for stocks with a recognition that data can improve going forward. Simply put, many of the headwinds responsible for the historic volatility this year particularly among high growth and technology sector names are essentially old news at this point. We are bullish. Data by YCharts Bullish Macro Developments For Stocks This article will focus on the technical picture but it's important to know that what we see as a tradable bottom in the NASDAQ is also consistent with fundamental and macro developments. We've covered a bullish case in stocks in recent articles. As a recap, the following factors highlight why we may be at a critical turning point for the bulls to get back in control. There are signs that the U.S. economy may have passed "peak inflation" with the potential for confirmation in the July and August CPI data. The correction lower in commodities including gas prices well off their highs suggests cooling inflation going forward. From there, we have the July Fed meeting set for next week where the group is widely expected to hike the policy rate by 75 basis points. Putting the two together is a sign the Fed's strategy is working and may be enough to mark a consequentially positive "peak hawkishness" scenario by removing the urgency to get more and more aggressive on rates into 2023. All this is in an environment where the economy has at least been relatively stable. The June payrolls report and recent retail sales data have been stronger than expected which provides some evidence the economy is capable of emerging out from what has been a rough patch. Finally, we can bring up the start of the Q2 earnings season which has been clouded by overall low expectations. It's understood the start of the year and period since April was difficult for a lot of companies which explains the deep selloff in several underlying QQQ names over the period. If much of the weakness in mega-cap tech leaders was based on the deteriorating outlook, what could evolve over the next few weeks as these companies begin reporting is a "buy the news" type of trade. Netflix, Inc. (NFLX) rallying higher as it beat its earnings estimate could be an example for other tech names to follow. There is also a case to be made that valuations are very attractive considering the top QQQ holdings remain profitable, generating strong cash flow while trading at historically cheap multiples. Improving macro data can help add bullish momentum to the market. Considering what remains a high level of pessimism towards risk assets, the setup here with bears forced to cover and chase stocks higher can work as a powerful dynamic. Data by YCharts Let's Get Technical First, it's important to note that QQQ reached a low of $269.28 on June 16th before the more recent climb was higher. Notably, this range of just under $270 represented an important area of technical support going back to Q3 2020. In other words, QQQ was able to hold what was nearly a 2-year low. Seeking Alpha Zooming into the action from the last 3-months, a key point here is that QQQ is currently trading above $300 which effectively closes a gap down from June 10th which at the time was based on the selloff that day from the hotter-than-expected May CPI report. In other words, the action in QQQ has reversed the entire decline over the past month. Seeking Alpha The next critical level to watch is ~$315 representing the high from early June. This is a good near-term upside target we expect the current momentum to reach over the next few weeks. A move higher would confirm a technical breakout and a very positive trading signal. Looking down the line, the July CPI report set to be released on August 10th could be the catalyst for this move marking a major regime change if the data confirms a trend lower in inflation. Seeking Alpha Over the past year, QQQ has had 3 "failed breakouts" since Q4 2021 at the $400 level, ~$375 in early Q2, and the call here is that we can finally turn the tables with this current move. Seeking Alpha Bullish QQQ Trade Idea With QQQ currently trading around $300, we see an interesting ongoing trade idea. Assuming we can get a breakout and sustained rally higher above $315, the upside move target over the next several months could put $375 back in play. Using the recent consolidation low area of ~$280 as a stop loss, a long trade here buying QQQ to make $75.00 while risking to lose $20.00 is an attractive 4x-to-1x reward to risk setup with a time frame of three to five months. Individual stocks and high beta QQQ holdings would likely outperform the upside in percentage terms. The attraction of the QQQ ETF is its relative diversification with 100 holdings that can work as a core holding of a diversified portfolio for the long run.

Seeking Alpha • Jul 09

TQQQ And QQQ: If It's Exciting, You Did It Wrong

Professional gamblers love to say that if you find gambling exciting, you are doing it wrong. The same wisdom applies to investing, especially with leveraged funds such as the ProShares UltraPro QQQ ETF (TQQQ). This article analyzes the key differences between TQQQ and its unleveraged counterpart, the Invesco QQQ ETF (QQQ). You will also see how we use both in a disciplined way for systematic (codeword for unexciting) alpha generation. The trick is to strike an optimal balance between the volatility decay and volatility boost. Thesis Now is a challenging time for investors, especially if you are exposed to the tech sector. To wit, the Invesco QQQ ETF (QQQ) has lost 19.5% YTD. And it is about 29% off its peak level, borderlining on a technical recession. Its 3x leverage fund, the ProShares UltraPro QQQ ETF (TQQQ), has lost 59.5% YTD. And a 59.5% decline requires a 247% rally to break even. As mentioned in our newly launched market service, at times like this, it is especially important to stay disciplined and stay with simple and proven methods that you truly understand. The thesis of this article is twofold. First, it will analyze the differences between TQQQ and QQQ, so investors can pick the right one to gain exposure to the tech sector tailored to their own risk profile. And second, it will demonstrate how we pursue aggressive growth in our real-money portfolio using TQQQ. We feel to urge our readers at times such as this to use a systematic method, especially with leverage funds such as TQQQ. Based on decades of our own investment experiences, a disciplined way is the best mechanism to help you manage the risks, both downside and upside risks, amid turbulent times. We will show an algorithm to adjust leverage adaptatively based on market volatility that has generated reliable alpha in the long term for us. Hope it can help you take the excitement or fear out of your investment decisions and put in consistent profit instead. Source: Seeking Alpha Basic information These two funds probably need little introduction. They are popular funds for investors to gain exposure to the tech sector. QQQ, with an AUM of $153B, is one of the largest and most actively traded ETFs based on the NASDAQ 100 index. TQQQ is smaller with an AUM of $10.9B. However, it is the largest and most traded leveraged ETF that I can find. You will notice that QQQ charges a much lower expense ratio of 0.2%, compared to TQQQ’s 0.95%. So the first thing you should consider is if your investment method can generate enough alpha to overcome the fee hurdle (more on this later). Besides the fee hurdle (which is the most obvious factor), there are a few other less obvious but also important factors to consider, as detailed next immediately. Source: ETF.com TQQQ, QQQ, and volatility decay Besides the fee, the other most important aspect in the use of TQQQ to me involves the volatility decay, as pointed out by the fund description itself as an important consideration: This leveraged ProShares ETF seeks a return that is 3x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, holding periods of greater than one day can result in returns that are significantly different than the target return, and ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. The operative word is that its 3x tracking is only on a single-day basis (and the highlights above were in the original quote). For readers new to the concept of volatility decay, a simple example will illustrate the essential points immediately. First, all securities suffer volatility including the “unleveraged” funds such as QQQ. I put “unleveraged” in quotation marks because an unleveraged fund is really a fund with a leverage ratio of 1x. Suppose the price of QQQ goes up 2% on day 1 and goes down 2% on day 2. At the end of day 2, QQQ’s price would NOT return to its original price. It would go down by 0.04%. It is purely math - because (1+2%)*(1-2%) is less than 1 by 0.04%. And 0.04% is the volatility decay. Second, leverage ETFs suffer volatility decay more severely. Following the above example, the 3x leveraged TQQQ would go up 6% on day 1 and go down 6% on day 2. As a result, its price at the end of day 2 would be 0.36% lower than its original price. Because (1+6%)*(1-6%) is less than 1 by 0.36%. Now that 0.36% is not only larger than 0.04%, it is larger by 9x, not 3x. And chart 1 above provides a real-time example of such more pronounced volatility decay in action. Recall that QQQ has lost 19.5% YTD and TQQQ has lost 59.5% YTD. You can see that 59.5% is more than 3x of 19.5% because of the volatility decay during a choppy market (together with the fee hurdle mentioned above). Volatility boost Now you must begin to wonder, then why on earth would I ever want to consider TQQQ? The reason is that volatility works both ways in a fair way (math is fair after all). In a range-bound or a declining market, volatility will cause decay. But in a market that enjoys a one-way rally, volatility will provide a boost. You can use a simple hypothetical example similar to those used above to verify this. Here I will use the chart below to show a real example during the past five years (2017 Jan to 2021 Dec) before the market went through its recent correction. As you can see from this chart, QQQ went up 248.7% during this period, and TQQQ went up more than 1470%. You can see that TQQQ went up more than 3x than QQQ even without a calculator – thanks to the volatility boost. By this time, it should have become clear that the trick with using leverage ETF is all about striking an optimal balance between controlling the risk of volatility decay and reaping the benefits of volatility boost. And we will discuss our method immediately below. Seeking Alpha How to use QQQ and TQQQ in a disciplined way? To strike that optimal balance, we adjust leverage dynamically based on market volatility. The concept is explained in the paper by Tony Cooper and the key is: It is difficult to predict stock market returns but relatively easy to predict market volatility. But volatility predictions do not easily translate into return predictions since the two are largely uncorrelated. We put forward a framework that produces a formula in which returns become a function of volatility and therefore become somewhat more predictable. We show that this strategy produces excess returns giving us the upside of leverage without the downside. The key results from Cooper’s paper are shown in the Figure below. It shows 135 years' worth of daily US index prices going all the way back to when stock index data were available in the US market. The orange circles show leverage factors of 1x (e.g., QQQ), 2x, and 3 (e.g., TQQQ). As you can clearly see, the annualized return first rises when the leverage is increased beyond 1x. For instance, raising the leverage to 2x would result in a roughly 5% average yearly return (and 1% alpha compounded over 50 years, the typical investment timeframe for most retirement accounts, is a lot). But you can't go overboard because performance will start to suffer if the leverage is increased more. For example, 3x leverage will drag the performance below 4%. This figure clearly shows the need to strike an optimal balance. Of course, these results do not mean that you could not use a 3x leveraged fund. The leverage ratio shown in the following chart is the effective leverage ratio for the entire portfolio. So in practice, you can use a 3x leverage fund such as TQQQ. You just need to control its location so that the effective leverage for your entire portfolio is below 3x. And as to be detailed next, we actually cap our leverage to 1.25x in our portfolio (which is already sufficient to generate the aggressive growth we need as you can see in the 2nd chart). Source: Alpha Generation and Risk Smoothing using Managed Volatility by Tony Cooper. Source: author. Our aggressive growth portfolio We have been implementing the above strategy in our real-money account for more than a decade (and the long-term results are shown above). Many details of our implementation are different from Cooper’s original methods and these differences are elaborated in our earlier article. A few key points are summarized here to facilitate reference: Our key allocation curve for TQQQ is shown in the chart below. We use the VIX index to measure the volatility of the market and adjust our leverage. We leverage less when VIX increases and more when the VIX decreases according to the blue curve. For the use of a 3x leverage fund such as TQQQ, we also cap my maximum leverage at 25% as shown by the green line. More specifically, the blueline follows a 1.5th power-law relationship in the form of Leverage ~ 16/VIX^1.5. So that when VIX = 16, the leverage is 25%, i.e., the maximum is reached and 25% of our equity exposure will be leveraged. The central idea is to adjust leverage by A/VIX^B. We tailor (and you should too) A and B considering the different leverages provided by the given fund and also the sensitivity you desire.

Seeking Alpha • Jun 30

Market Report: 4th Week Of June 2022

The S&P 500 rebounds out of bear market territory as investors reassess the current macroeconomic terrain. GS revises their recession expectations by doubling the probabilities. Consumer sentiment worsens as the University of Michigan index posts an all-time low reading. China remains the preferred market within APAC as QE progresses and lockdowns gradually lifted. Bitcoin and Ethereum remain the most oversold they have ever been on a monthly RSI timeframe. I still expect more downside. In this market report series, I will summarize key developments in the prior week as well as provide outlook for the upcoming week. This way, investors will be better able to navigate the uncertainty and volatility as the Fed ramps up i/r and QT. Weekly Market Movements 4th Week June S&P500 Heat Map (Finviz) Markets staged a stunning rebound, ending the week up significantly as investors reassessed the current macroeconomic terrain. The SPY (NYSEARCA:SPY) closed the week up 645bps, Dow (DIA) up 539bps, and the Nasdaq (QQQ) up 745bps. Year to date, the SPY remains down 18.5%, DIA down 13.9%, and the technology index down 26.6%. This week, the Fed changed their policy tone to guiding that a soft landing would be very challenging to achieve. Charles Evans, part of the Fed, said another 75-bp hike is a "very reasonable place" for discussion at July's FOMC meeting, but "I don't think 100 basis points is necessary." Goldman Sachs Revises Recession Probabilities GS has revised their probability of a recession to 30% over the next year, compared to 15% previously. "We now see recession risk as higher and more front-load," say economists led by Jan Hatzius wrote in the note. "The main reasons are that our baseline growth path is now lower and that we are increasingly concerned that the Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply." The slowdown in activity refers to demand destruction in the case of a resulting/forced recession. Treasury Yields and The Greenback Reverse In the bond markets, treasury yields have reversed course once more as fears of a recession mount. This comes against a backdrop of investment banks all revising their probabilities for a recession upwards based on May data. The US10Y currently trades at 3.13%. JPMorgan now also sees select opportunities in government debt, with the risk to reward ratio more favorable with as yields have room to fall as investors assess the reality of a recession. The alternative case remains that the Fed is really on path to tighten aggressively and 10Y yields will rise to 4% before falling. If true, treasury holders risk exposure to more pain from here. US Dollar Reverse, $DXY (TradingView) Similarly, the greenback has seen outflows once more as worries over growth proliferate. The $DXY currently trades at $104, down from the $106 high observed last week. Wage Inflation Lags The Broader CPI Headline CPI Outpaces Wages (Panther Research) Wage growth has also not kept up with inflation, further evidence that consumers are unable to sustainably weather the rising prices organically, and this data corroborates the ATL 4.4% personal savings rate print 2 weeks ago, the portion of which one saves one's paycheck. The effects of rising prices are also starting to be felt on a broader level with all types of workers seeing their purchasing power diminish. At the start of 2022, 64% of the U.S. population was living paycheck to paycheck, up from 61% in December and just shy of the high of 65% in 2020, according to a LendingClub report. Even among those earning six figures, 48% said they are now living paycheck to paycheck, up from 42% in December, the survey of more than 2,600 adults found. US Core CPI (YoY) Still On Track To Have 'Peaked' (Panther Research) The problem is that despite the slowdown in core inflationary pressures since the peak acceleration in March (+6.5% YoY), food, and energy, the 2 categories of goods that consumers just simply can't cut back entirely (party inelastic demand), have been surging higher. "You've got to eat, you've got to commute, these are not discretionary expenses". Headline CPI Hasn't Peaked Owing To Volatile Food + Energy (Panther Research) Some economists also believe that we are likely headed into an inflation explosion on the 4th of July, which would reflect in the following July CPI result and not the immediate June one. Independence day (4th of July) is 1 of the 3 holidays that US consumers travel and splurge the most, with the AAA predicting that 47.9M consumers will travel 50miles+ over the weekend.

Seeking Alpha • Jun 23

QQQX: Outperformance Over QQQ Should Widen

When we last covered QQQX, we highlighted why positive returns were not in the fund's future. 3 months later, the fund has dropped by one-quarter of its value. We examine the tea leaves for direction.

Seeking Alpha • Jun 13

QQQ: The Nasdaq 100 Declines Are Far From Over

The Nasdaq 100 has dropped dramatically, but still has much further to fall. As rates continue to rise, the earnings yields of the Nasdaq will pull higher. Additionally, the spread between the Nasdaq earnings yield and the Treasury rates needs to widen.

Seeking Alpha • Jun 07

QQQ: Did You Miss The COVID Tech Boom? No Worries - You Get A Do-Over

It was all too easy for too long. Retail stock jocks trounced prudent investors in 2020 and 2021. Life is long however, and memories too. 2022 so far has been the story of Big Money's revenge. FinTwit is back in the cheap seats, high-beta growth stocks are back to pre-pandemic levels. And Big Money? Accumulating, in our view. Expecting big gains. We walk you through our logic below, taking a detour through QQQ, energy stocks, and finishing with a number of ideas as to how you might play the "growth is dead - not!" theme.

Seeking Alpha • May 31

QQQ Vs SPYG: Which Is The Best Growth ETF For The Future?

QQQ has become identified with innovative Tech Growth but there is nothing in its index that ensures this will continue. ETFs tracking the S&P 500 Growth Index are valid alternatives, not required to hold stocks listed only on the NASDAQ. SPYG is the best of these. We compare how QQQ and SPYG's holdings differ both in their Top 10 and the ETFs as a whole and see some important sector concentration differences. We find that provided Valuation Metrics can't be usefully compared though SPYG looks slightly better valued but still overvalued for what it holds. The impact of high interest rates make high P/Es more dicey.

Seeking Alpha • May 23

QQQ Carnage - The Algorithm Remains Short

The leader becomes the laggard. Valuations reflected easy money. Tech stocks have a long history of boom and bust. The QQQ follows the NASDAQ higher and lower. The APS is short the QQQ ETF.

Seeking Alpha • May 12

Tradeable Bottom Is In Sight For Speculative Tech

Market internals are at levels historically associated with high reward buy opportunities. Negative sentiment is prevailing and is a strong contrarian indicator. Innovation and unprofitable tech are very oversold and should bounce the most as the market turns.

Seeking Alpha • May 05

QQQ: Powell Sends The Market Flying, But Is The Fed Falling Further Behind The Curve?

Today's Fed meeting was decidedly dovish compared with expectations. After Jerome Powell took a 75 basis point hike off the table, investors rushed into TIPS, gold, the Nasdaq, and ARKK. Cash rates are far too low, but they might catch up if the Fed gets hit with another hot CPI number. While the Fed had done a good job of catching up, they're being too soft here, echoing the mistakes of the disastrous 1970s Federal Reserve. I think long-term investors have an opportunity to de-risk from tech while there's still plenty of optimism that the Fed can achieve a soft landing, while those looking to put new money to work should be cautious.

Seeking Alpha • Apr 22

QQQ: Curb Your Enthusiasm

Half of the QQQ ETF is invested in only seven companies which translates into an incredible degree of concentration risk. 83% of the portfolio is further concentrated in only three of the eleven primary economic sectors, with half in the information technology sector alone. The ETF has zero weighting in four of the eleven primary economic sectors, with marginal exposure to two sectors with excellent growth prospects: healthcare and industrials. With a weighted portfolio P/E of 38x the 2022 consensus earnings estimates and the mature nature of the Nasdaq-100 companies, there is a heightened risk of multiple compression. The downside risk/reward asymmetry is well supported by a bearish technical backdrop which was recently punctuated by a death cross.

Seeking Alpha • Apr 07

Is QQQ A Good Buy For Dividend Portfolios? Why There Are Better Choices

QQQ has performed very well in recent years, although it mostly moved in line with the broad market from 1999 to 2015. The recent outperformance was driven by factors such as ultra-loose monetary policy, pandemic tailwinds, etc. Those factors will likely not persist going forward. QQQ does not seem like a great income investment. Investors might be better off looking for individual stocks in this space.

Seeking Alpha • Mar 28

QQQX: A Slightly Better Choice To QQQ, But Don't Expect Positive Returns

QQQX uses covered calls to generate income. The strategy has two major drawbacks. We go over these drawbacks and how investors can generate better risk-adjusted returns.

Seeking Alpha • Mar 16

VOO And QQQ: Which ETF Is The Better Buy?

VOO represents the large-cap market contained in the S&P 500 Index; QQQ is the NASDAQ 100 index heavy in tech investments. QQQ has outperformed over the past decade as the current tech giants rose to dominate, but VOO did better in the decade following the 2000-2003 crash. Both indexes are capitalization weighted; 8 of 10 top stocks are the same tech companies, but much more heavily weighted in the smaller QQQ index. QQQ stocks have higher growth but also higher valuations; the market is currently pivoting toward value, which would favor the VOO ETF. Versions of the S&P 500 Index are frequently in institutional accounts and retirement options; VOO is the default choice but QQQ may outperform long term albeit with higher volatility.

Seeking Alpha • Mar 08

QQQ ETF: The Nasdaq Declines May Be Far From Over

The QQQ ETF has fallen into a bear market. The declines may be far from over as investors look to decrease risk. All of this comes at a time when liquidity is thinning out and financial conditions are tightening.

Seeking Alpha • Feb 25

Ukraine Won't Matter To Stocks In A Month

Russia's violence to Ukraine won't mean much to the global economy and markets much a month from now. What we are seeing is an acceleration of a correction that was already occurring. One of the results of the Russia invasion of Ukraine will be a release of more oil from the Strategic Petroleum Reserve. The impact of a 25 basis point Fed rate hike in March, a few more by summer and more oil from the SPR will lower inflation dramatically by autumn. It's time to start thinking about where to buy stocks, not where to sell them.

Seeking Alpha • Feb 11

The QQQ ETF May Soon See New Lows

The QQQ has rebounded in recent days, but that rebound is likely to fade fast. Rates are not much higher and that will compress the PE ratio of the index. The technical and options setup favors a revisit of the January lows.

Seeking Alpha • Jan 21

The QQQ ETF Declines Are Far From Over

The QQQ ETF has crumbled as the market price valuations tumble due to rising rates. The biggest problem is that many of the biggest components are now breaking down. There may be a very short-lived relief rally coming.

Seeking Alpha • Jan 11

QQQ And QQQM: Where The Nasdaq-100 Stands Heading Into Earnings Season

QQQ and QQQM are two options investors have for tracking the Nasdaq-100 Index. QQQ is the more popular with $206 billion in AUM, but QQQM is 0.05% per year cheaper. The Nasdaq-100 currently has a forward price-earnings ratio of 35.37, or ~6 points higher than the S&P 500 Index using a simple weighted-average method. While its historical revenue and earnings growth rates justify a higher valuation, the trend is currently negative. Last quarter's EPS surprises sharply fell, and analysts are reducing their expectations. Monitoring revenue and earnings surprises is a good alternative to technical analysis for assessing investor sentiment. Market enthusiasm was high in 2020 when QQQ outperformed but has since dwindled. The bottom line is that although Nasdaq-100 companies are among the most profitable in the world, a better entry point will likely come after the next earnings season concludes. Be patient and lean a little more toward value in the meantime.

Seeking Alpha • Jan 03

Options Market Suggests Favorable Outlook On QQQ To Mid-2022

QQQ has delivered very high returns in recent years, but slightly lagged the S&P 500 for 2021. Valuations on some QQQ components are extremely high. The tech-heavy NASDAQ 100 is sensitive to interest rates. The market-implied outlook (calculated from options prices) is bullish for QQQ to mid-2022, albeit with elevated volatility.

Seeking Alpha • Dec 09

ARKK Vs. QQQ: Which ETF Is The Better Pick For Long-Term Investors?

In the past year, ARK Innovation ETF (ARKK) has retreated from 152% growth in 2020 to -14% in 2021. Invesco QQQ ETF (QQQ) is up 29% in the past year. In the past 10 years, QQQ grew 304% while ARKK, with significant volatility, grew 406%. Stocks in the ARKK ETF can be considered Covid stocks, benefiting from the lockdowns, which may not be relevant post-lockdowns.

Seeking Alpha • Nov 08

QQQ: Calling All Income Investors

Some investors require that their portfolio holdings provide periodic payments, aka income. While these investors may avoid QQQ due to lacking dividends, income concerns need not constrain their investing choices. Rather than going dividend-shopping, these investors should seek the best risk-adjusted return and then specify their own payment policies.

Seeking Alpha • Oct 01

VGT Vs. QQQ: One Wins By A Hair

Both QQQ and VGT are overweight technology, with VGT on the extreme end. Both QQQ and VGT have had fairly similar historical performance and volatility. VGT has significantly more concentration in its top two holdings.

Seeking Alpha • Sep 29

QQQ: Market-Implied Outlook To Early 2022

Options prices can be used to calculate the consensus outlook for QQQ, referred to as the market-implied outlook. The market-implied outlook for QQQ was bullish at the start of 2021, but suggested that SPY offered a superior risk-return tradeoff. The updated market-implied outlook for QQQ into early 2022 is bullish, with moderate volatility. These results suggest the current elevated volatility, largely driven by fear of rising interest rates, is likely to be temporary.

Seeking Alpha • Sep 14

Is QQQ Overvalued Or Undervalued?

QQQ is generally perceived as tilting very heavily towards Tech Growth. Though many investors believe you can't use traditional valuation metrics to assess Tech Growth, I disagree. Invesco's valuation metrics don't include average 5-year EPS growth, a metric that is particularly useful when valuing mature but still aggressively growing stocks like those that dominate QQQ. We look at how the average 5 year EPS growth rate relates to P/E of the many QQQ stocks with 5+ years of earnings. We also look at how the current price of QQQ stocks compares to analysts' 5-year price targets. Valuation is a useful tool but must be used with caution, as crowd sentiment plays such a strong role in QQQ's pricing.

Seeking Alpha • Aug 22

TQQQ: A Subtle Way Holding Long Can Go Wrong

TQQQ can underperform QQQ even if QQQ rises in the long run. This happens in volatile markets where volatility decay eats away at TQQQ returns. While most TQQQ investors primarily fear a bear market, volatility decay during bull markets accounts for a significant portion of TQQQ underperformance.

Seeking Alpha • Aug 15

QQQ: Valuations Are High But Long-Term Holders Should Be Comfortable

While tech stock valuations appear high, QQQ is probably not in bubble territory. Given the high return on equity that the QQQ portfolio generates, the long-term IRR is likely to remain safely strong and positive. So, long-term buy-and-hold investors should be comfortable with holding QQQ, although admittedly there are valuation risks brewing for a correction of perhaps 10-20% in the medium term. Equally probable, however, is a situation in which we see a "flat market" with low volatility, as earnings pick up and "catch up" with valuations. I would therefore be optimistically neutral at present, but would not be pressed to sell, especially while monetary policy remains as accommodative as it is at present.

Seeking Alpha • Jul 13

Apple And Amazon Are Leading The Stock Market To Extremely Overbought Levels

The Nasdaq 100 is now in rarely seen overbought levels. The majority of the time when the index was this overbought a sharp correction followed. Apple and Amazon appear to be leading the charge on the latest price movement.

Seeking Alpha • Jun 29

QQQ: Borrowing From The Future

The QQQ's parabolic advance will undoubtedly come at the expense of dismal future returns. A dramatic increase in transfer payments and restrictions on the kind of spending that consumers have been able to engage in have led to an unsustainable boom in Nasdaq sales. The current high personal savings rate belies the ongoing decline in national savings which will come at the expense of future real GDP and consumption growth. With a dividend yield of just 0.7%, investors are likely to have to wait decades before the Nasdaq 100 offers a reasonable dividend yield.

Shareholder Returns

	QQQ	US Capital Markets	US Market
7D	-1.9%	-5.2%	-2.5%
1Y	31.3%	0.7%	19.0%

Return vs Industry: QQQ exceeded the US Capital Markets industry which returned 0.7% over the past year.

Return vs Market: QQQ exceeded the US Market which returned 19% over the past year.

Price Volatility

Is QQQ's price volatile compared to industry and market?
QQQ volatility
QQQ Average Weekly Movement	3.3%
Capital Markets Industry Average Movement	3.8%
Market Average Movement	7.3%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	3.1%

Stable Share Price: QQQ has not had significant price volatility in the past 3 months compared to the US market.

Volatility Over Time: QQQ's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1999	n/a	John Jacobs	www.invesco.com/portal/site/us/investors/etfs/product-detail?productId=QQQ

Invesco QQQ Trust, Series 1 is an exchange traded fund launched by Invesco Ltd. The fund is managed by Invesco Capital Management LLC. The fund invests in public equity markets of global region.

Invesco QQQ Trust, Series 1 Fundamentals Summary

How do Invesco QQQ Trust Series 1's earnings and revenue compare to its market cap?
QQQ fundamental statistics
Market cap	US$474.99b
Earnings (TTM)	US$71.90b
Revenue (TTM)	US$2.43b

6.8x

P/E Ratio

200.0x

P/S Ratio

Is QQQ overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report (TTM)
QQQ income statement (TTM)
Revenue	US$2.43b
Cost of Revenue	US$264.67m
Gross Profit	US$2.17b
Other Expenses	-US$69.73b
Earnings	US$71.90b

Last Reported Earnings

Sep 30, 2025

Next Earnings Date

n/a

Earnings per share (EPS)	106.95
Gross Margin	89.13%
Net Profit Margin	2,953.78%
Debt/Equity Ratio	0%

How did QQQ perform over the long term?

See historical performance and comparison

Dividends

0.4%

Current Dividend Yield

Payout Ratio

Does QQQ pay a reliable dividends?

See QQQ dividend history and benchmarks

When do you need to buy QQQ by to receive an upcoming dividend?
Invesco QQQ Trust Series 1 dividend dates
Ex Dividend Date	Jun 22 2026
Dividend Pay Date	Jul 10 2026
Days until Ex dividend	8 days
Days until Dividend pay date	10 days

Does QQQ pay a reliable dividends?

See QQQ dividend history and benchmarks

Company Analysis and Financial Data Status

Data	Last Updated (UTC time)
Company Analysis	2026/06/29 02:56
End of Day Share Price	2026/06/29 00:00
Earnings	2025/09/30
Annual Earnings	2025/09/30

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

Package	Data	Timeframe	Example US Source ^*
Company Financials	10 years	Income statement Cash flow statement Balance sheet	SEC Form 10-K SEC Form 10-Q
Analyst Consensus Estimates	+3 years	Forecast financials Analyst price targets	Analyst Research Reports Blue Matrix
Market Prices	30 years	Stock prices Dividends, Splits and Actions	ICE Market Data SEC Form S-1
Ownership	10 years	Top shareholders Insider trading	SEC Form 4 SEC Form 13D
Management	10 years	Leadership team Board of directors	SEC Form 10-K SEC Form DEF 14A
Key Developments	10 years	Company announcements	SEC Form 8-K

^* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

Invesco QQQ Trust, Series 1 is covered by 0 analysts. 0 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

Invesco QQQ Trust Series 1 (QQQ) Stock Overview

Invesco QQQ Trust, Series 1 Competitors

Price History & Performance

Recent News & Updates

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on July 10, 2026

QQQ: The AI Business Model Is Likely Collapsing

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on March 27, 2026

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on December 31, 2025

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on October 31, 2025

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on July 31, 2025

Recent updates

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on July 10, 2026

QQQ: The AI Business Model Is Likely Collapsing

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on March 27, 2026

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on December 31, 2025

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on October 31, 2025

Invesco QQQ Trust, Series 1 announces Quarterly dividend, payable on July 31, 2025

Where Is The Bottom In 2025

Volatility Abounds And Headlines Rule The Market - Tradable Bounce Coming But Not A Momentum Market (Technical Analysis)

QQQ: Tariff Tensions Could Drag Nasdaq Tech Stocks Into Bear Territory

Invesco QQQ Trust, Series 1 Declares Distribution for the First Quarter of Calendar Year 2025, Payable on 30 April 2025

QQQ Vs. KWEB: China's Lead Over The U.S. May Be Temporary

QQQ: The Bottom Probably Isn't In

Wall Street Lunch: A Crisis Of Confidence

QQQ Vs. QQQM: You'll Be In For The Long Run, Hold QQQM

Hedging QQQ With Growth Investor Pro

It's Trump's Market, And We're Living In It, Market Pushes Up And Consolidates For Next Leg

QQQ: No Tech Bubble, But Caution Is Necessary

QQQ: Time To Consider Hedge Via Options

QQQ: Why Another 83% Tech Crash Should Not Be Ruled Out

Market Pulls Back On The Fed, Heading Down Or Just A Shakeout?

Market Feels Frothy - Ride It While We Can But Be Ready To Get Out!

Holiday Week With Healthy Chop (Technical Analysis)

Is This A Momentum Market?

More Pullback Than We Wanted

What A Week! Market Poised To 'Trend' For Big Gains! (Technical Analysis)

The Momentum Weekly - On The Cusp Of The Election

The Momentum Weekly - Market Likely To Declare Itself Soon With Earnings And Election Ahead

QQQ: An Aggressive Bet On AI Adoption

QQQ: The Earnings Season Could Burst The Bubble

The Great Generational Leadership Rotation

QQQ: My In-Depth Look At The Nasdaq-100 Fundamentals

Fed Moves And Election Year Jitters (QQQ Rating Downgrade)

QQQ: What If A Soft Landing Happens?

QQQ Vs. 'Us' After 4 Years: Passive Tech Vs. Active Dividend Investing

QQQ: Days Of AI Hype Are Over As Focus Turns To Monetization (Rating Upgrade)

Wall Street Lunch: Bears On Parade

QQQ: Benign Rotation Or The Bubble Burst?

Buying Puts On QQQ

QQQ: Bumpy Short-Term Ride Possible (Rating Downgrade)

QQQ: Almost Time For A Breather

QQQ: I Was Wrong (Rating Upgrade)

QQQ: Macro Trends Favor Non-Tech Areas, Bullish Seasonal Trends

QQQ: The Big Tech Is Fundamentally Vulnerable

Invesco QQQ Trust ETF: Short-Term Momentum Is Coming To An End

QQQ: The Nasdaq Has Entered The Matrix As 'The One' Arrives

SPDR S&P 500 ETF And Invesco QQQ Trust: Almost All Investors Are Crowded Into The Same Side Of The Boat

QQQ: Collection Of Best Ideas

QQQ: Reaching For A New High (Technical Analysis)

QQQ Is Getting Overpriced, But It's Still A Hold (Upgrade)

QQQ: Positioning For A Major Breakdown

QQQ: The Tech Crash, Where Is The Bottom (Technical Analysis)

QQQ: Summer Glory To Fade Off In Fall Obscurity?

Why REITs Will Trounce QQQ In A High Interest Rate Environment

QQQ: Growth Recession Should Crush Growth Stocks (Technical Analysis)

QQQ: An Excessive Bust Is Coming

QQQ: The Stock Market Rally Is Not The Start Of A New Bull Market

SOXX Vs. QQQ: Time To Consider Heavier Bets On Tech

QQQ: The Next Leg Higher Will Be Painful For Bears (Technical Analysis)

TQQQ And QQQ: If It's Exciting, You Did It Wrong

Market Report: 4th Week Of June 2022

QQQX: Outperformance Over QQQ Should Widen

QQQ: The Nasdaq 100 Declines Are Far From Over

QQQ: Did You Miss The COVID Tech Boom? No Worries - You Get A Do-Over

QQQ Vs SPYG: Which Is The Best Growth ETF For The Future?

QQQ Carnage - The Algorithm Remains Short

Tradeable Bottom Is In Sight For Speculative Tech

QQQ: Powell Sends The Market Flying, But Is The Fed Falling Further Behind The Curve?

QQQ: Curb Your Enthusiasm

Is QQQ A Good Buy For Dividend Portfolios? Why There Are Better Choices