Analyst: Don’t Buy QQQ Unless It Recovers From This Pullback First

Technical analyst Gary Savage in his chart of the day points out a major bearish development in the PowerShares QQQ Trust (NASDAQ:QQQ) that could also be a negative signal for other indexes as well.

From Smart Money Tracker:

The Nasdaq 100 is at risk of signaling a failed intermediate cycle.
Nasdaq 100

Savage notes that he “would not buy stocks again unless the Nasdaq can recover the breakout and make a new high.” A new high would mean the QQQ needs to rise to the $120 level, which would be approximately a 3.9% gain from its current price point.

A couple weeks ago, we pointed out that money flows had returned to the QQQ following an initial post-election purge, but those bullish bets have proven to be a false tell.

Tech stocks have in fact taken quite a pounding this week. Biotech has been especially weak, as investors begin to digest the fact that the issues plaguing that industry aren’t going away under a Trump presidency. Meanwhile, weak PC shipments certainly aren’t helping matters either, nor are acute weakness in Facebook and Apple stock.

The QQQ posted slight gains in Friday morning trading, sitting around the $115.55 per share level. Year-to-date, the venerable ETF has gained just 3.09%, versus a 7.8% rise in the benchmark S&P 500 index in the same period.