Popular Nasdaq exchange-traded fund PowerShares QQQ Trust (NASDAQ:QQQ) is the ultimate blood in the street opportunity. After plummeting from a high of nearly $237 to a low of $165.93 on the coronavirus, and fears of a recessionary nightmare, the QQQ ETF is starting to show big signs of life.
At triple bottom support dating back to early 2019, the QQQ is also exceptionally oversold at its lower Bollinger Band, with over-extensions on relative strength (RSI), MACD and Williams’ %R. If it can hold that support line, I believe it could quickly fill its gap at $194.
But that all depends on Congress and its ability to get the economic relief bill done.
$2 Trillion Coronavirus Stimulus Package Could Pass Shortly
After two failed procedural votes stalled, Congress has a $2 trillion stimulus deal on the table. It just needs final approval from the Senate and the House of Representatives to get moving. “This is a wartime level of investment into our nation,” said Senate Majority Leader Mitch McConnell.
While the final terms of the deal have not yet been released, an earlier version would provide up to $1,200 per individuals and $500 per child. Each are reduced if an individual makes more than $75,000. The initial draft also included a $350 billion fund for small businesses to mitigate layoffs, and support pay roll, as well. In addition, the plan will “deliver a massive infusion of financial aid into a struggling economy hard hit by job loss, with provisions to help impacted American workers and families as well as small businesses and major industries including airlines,” according to CNN.
All of this is exactly what the markets and ETFs like QQQ desperately needed to happen to rally off historic lows.
Most of the QQQ ETF Holdings are Far Too Oversold
The beauty of the QQQ ETF is that it offers more for less.
For example, the ETF trades at $180 a share. If we buy 100 shares, that’s $18,000. Plus, we’re given exposure to some of the biggest, most oversold tech companies around. In fact, some of the big ones include Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Adobe (NASDAQ:ADBE) and dozens more.
By holding the QQQ, investors are given exposure to all of those oversold stocks at $180.
If we were to buy 100 shares of each of the QQQ ETF holdings, you can be sure it’ll cost far more than $180. To buy 100 shares of Amazon, for example, you’d have to pay out almost $192,000.
With the QQQ ETF, it just makes sense to buy more for less.
If we can get a bill from Congress, and the QQQ can hold support dating back to 2019, I strongly believe the QQQ ETF could eventually recover to $236.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999. As of this writing,he did not hold a position in any of the aforementioned securities.