For the last 4 years (2020-2024), we have been in a narrow band where--generally speaking--SPY and QQQ have performed comparably. 2022 is the notable exception, where inflation increased rapidly and QQQ underperformed SPY.
For the prior 12 years before that (2008-2020), QQQ outperformed SPY handedly. Inflation was low. Interest rates were held at ~0%.
When you overlap the last 16 year channel with the last 4 years horizontal band it becomes clear that one (or both!) of these trends will break down.
Option 1: Inflation is under control, and the last 16 year channel is sustained. 4-year trend breaks.
Option 2: Inflation remains in limbo, and we stay in the new 2-year horizontal channel; 16-year trend breaks.
Option 3: Inflation is rampant, and QQQ underperforms SPY. Both trends broken.
What's it going to be?
For the prior 12 years before that (2008-2020), QQQ outperformed SPY handedly. Inflation was low. Interest rates were held at ~0%.
When you overlap the last 16 year channel with the last 4 years horizontal band it becomes clear that one (or both!) of these trends will break down.
Option 1: Inflation is under control, and the last 16 year channel is sustained. 4-year trend breaks.
Option 2: Inflation remains in limbo, and we stay in the new 2-year horizontal channel; 16-year trend breaks.
Option 3: Inflation is rampant, and QQQ underperforms SPY. Both trends broken.
What's it going to be?
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.