QQQ weekly: 6 - 10 July 2026
No change in the range
Price action
QQQ continues to trade inside the 700-745 range in play since early June’s pullback. On the positive side, realised volatility is falling (as measured by QQQ’s 14-day ATR), while support at the 50dma and the round number 700 is holding. Furthermore, MAGS is looking perky again, helped in part by META’s strong +15% performance this week.
Zooming out to the weekly chart (below) helps contextualise the rapidity of the April-May melt-up. It’s a reminder that a protracted consolidation phase really shouldn’t be a surprise.
The Fed
On Wednesday, the Fed released the minutes of their June meeting. The minutes reflect a Fed that’s focused on inflation. They are laying the mental groundwork to hike if necessary, but also open to holding or even cutting if price pressures ease. The minutes suggest an open-minded, data-dependent committee, rather than a determinedly hawkish one.
Elsewhere, John Williams gave an interesting speech, in which he repeated his view that policy is well-positioned to return inflation to the 2% target, which points to holding policy as it is. He also echoed Warsh’s optimism (expressed at Sintra last week) that inflation pressures may be easing off. Not terribly hawkish.
Williams (Tue): economy growing steadily, jobs stable, policy well-positioned to achieve Fed’s goals, future decisions depend on incoming data and evolving balance of risks, inflation pressures remain too high, but becoming more optimistic about the near-term outlook as declining energy prices should help cool inflation further, and likely near peak impact of tariffs on inflation.
We’ll hear from Warsh again on Tuesday when he gives his testimony to the House, shortly after CPI comes out.
Markets & Narratives
AI
In my last post I discussed the causes behind the recent volatility in the AI theme. That volatility continued this week after Samsung reported earnings on Tuesday in the Asia session. Despite a strong report, Samsung dropped -7% on the day, taking down US memory and semi names. The momentum factor, which reflects the AI trade, has certainly experienced a big correction now (see below). Has this move now run its course?
Iran
This week, Trump stated that the MoU America signed with Iran is over. Stocks don’t appear to be bothered, on the assumption that neither side want to carry on at each other indefinitely. However, there’s a shelf-life on that view if military action escalates. There have been more exchanges this weekend, though weekend markets show limited reaction in equity markets (-0.5%), and only a modest up-tick in oil (+2.5%).
Breadth
Breadth is looking fine. As Rachel Dashiell points out (below), the % of stocks above their 200 and 50dma is rising, with no diminution in stocks making new 52-week highs, and no spike in stocks making new 52-week lows.
Sentiment & Positioning
The NAAIM continues to cool off after its recent trip to 99, which is good to see. However, if QQQ pushes back up to its highs and breaks out, it’s likely this and other indicators will quickly flip back to “too bullish”. That makes me think stocks will struggle to push on without a more significant sentiment re-set.
Elsewhere, Bank of America’s Bull & Bear indicator has inched up to 9.5, which is very high. This needs a re-set.
Lastly, Goldman Sachs’s US Equity Sentiment Indicator is at 1.5, in “stretched” territory, having reached 2.0 a week earlier. It can go higher, but broadly this is chiming with BofA’s indicator.
Seasonality
Here’s a useful graphic representation of the seasonal impact of midterm elections. The general pattern is flat/down on the way in, then up on the way out. This is quite influential in setting my base case for the summer months this year. Hat tip Isabelnet, post here.
The flip side of weak Q3 seasonality is a strong phase for the VIX, which starts in late July.
Summary
Price action: QQQ remains rangebound short-term. The long-term primary trend is bullish.
The Fed: FOMC minutes reflect an open-minded Fed. Williams gave a speech echoing Warsh’s tentative optimism about inflation.
Markets & Narratives: The AI theme has experienced a decent correction, as measured by the performance of the momentum factor. Conflict between America and Iran continues.
Breadth: fine
Sentiment & Positioning: NAAIM has cooled, but BofA’s indicator remains too hot, while GS’s indicator is stretched.
Seasonality: seasonal weakness for the momentum factor has been playing out. Midterms are just over the horizon.
Key events next week: Tue - CPI and Warsh testimony, plus bank earnings (JPM, BAC, C); Wed - ASML earnings; Thu - TSM and NFLX earnings.
View
Short-term: trendless conditions likely to persist
No real change to my short-term view this week. QQQ remains in a digestion phase after a steep rally in April and May. There is scope, maybe, for a positive surprise from CPI next week, and perhaps Warsh will throw the market a dovish bone, which could push QQQ to a new all time high. However, my base case remains more consolidation and chop. That view rests on: (i) sentiment needs a re-set; (ii) seasonal patterns around midterm elections are not helpful; (iii) volatility tends to pick up in the summer months; and (iv) QQQ is extended relative to its long-term bullish channel.
In my trading, I have reduced risk, and I’m focusing on shorter-term opportunities and intraday moves, as opposed to longer-term swing trades that worked so well in April and May. I closed swing positions in IBB and LABU, but will be watching to see if they set up again.
Long-term: cautious bullish (no change to my long-term view this week)
From a long-term technical perspective, QQQ is trending in a bullish primary channel in play since late 2022. It sits above its long-term moving averages, which are sloping upward. The bull market is intact.
From a fundamental perspective, there are tailwinds supporting the long-term bull market. Fiscal support continues, with the US running a large deficit that stimulates the economy, which is strong; corporate earnings have been stellar; the AI theme suggests trillions of annual capex spending ahead.
While I’m bullish from a long-term perspective, I’m somewhat cautious on a 3-4 month view on the basis of unhelpful midterm seasonality until Q4.
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See you next week,
Alex