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Tech Bulls Eye Potentially Explosive Stock Market Pattern

ByChris Kimble
Published 01/27/2023, 12:39 PM
Updated 07/09/2023, 06:31 AM

Investors are hoping a strong January is just the start to a strong recovery for stock prices. Particularly, tech stock prices.

Last year's selloff hit the sector particularly hard as a slowing economy and inflation are strong headwinds for growth stocks. Investors hope these headwinds slow, or go away in 2023.

Today, we look at the chart of an important stock market index to see what may be brewing over the coming months.

Below is a long-term monthly line chart of the First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ:QQEW). We can see that despite the vicious selloff, QQEW held its rising 13-year price channel support.

QQEW Monthly Chart

The stair-step bounce that has ensued has helped to form a very bullish stock market pattern: an inverse head and shoulders. Currently, price is testing the neckline of this pattern, which comes into play as resistance.

This will turn bullish if a breakout takes place here.

A tech breakout would also send a bullish message to the broader market and economy. Stay tuned.

Latest comments

The trend for the SP is looking like a big breakout is upon us. A lot of stocks are pushing at the long term downward trendline. Price and trend are right 💯 percent of the time.
Market down tern begins Monday..will be big time from here IMO.
While it's hard to look at the included chart in this article and not see a path higher, I don't think thats where we're heading. I'm basing that on the fact that the Fed has made it clear numerous times over the past year that they do NOT want to see stocks ramp straight up as the injection of liquidity that causes basically defeats what they're trying to do by raising rates. As a matter of fact, liquidity levels (even with all of the Fed's recent rate increases) are still pretty much where they were before the rate increases even began. Thus, don't be surprised if Powell's presser this week is VERY hawkish as he tries to slow down this most recent market run-up. Plus, lets not forget the upcoming Debt Limit drama as I believe Congress is going to be flying the ship pretty close to the sun (and causing a sharp market selloff) before eventually kicking the can down the road as they always do. So, in conclusion (and in my opinion) maybe another few days up but then down we go. GLTA!
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