By Christine Idzelis

The U.S. stock market has seen a big rebound from its April lows. Photo: Agence France-Presse/Getty Images

The Nasdaq-100 index’s unusually strong rally has left investors questioning whether U.S. large-cap tech stocks are “dangerously overextended,” according to DataTrek Research.

After its April 8 low, an exchange-traded fund that tracks the Nasdaq-100 NDX,the Invesco QQQ Trust Series I QQQ, soared 26.6% in the 50 trading days through June 20, said Jessica Rabe, co-founder of DataTrek Research, in a note emailed Monday.

“History says the QQQs look overbought here, and that the large move off the April 8 lows has run its course,” said Rabe. And yet, “we have a tale of two perspectives” when assessing whether the Nasdaq-100 is overbought or “performing entirely in line with historical norms.”

That’s because the Nasdaq-100’s performance over the last 100 days was “entirely unremarkable,” according to Rabe. The Invesco QQQ Trust Series I was up 5.8% over that stretch — below its 10-year average of 6.8%, according to the DataTrek note. 

“Whether the Nasdaq-100’s recent performance looks very overextended or boringly normal depends on the time frame one considers,” said Rabe.” If you’re uncomfortable with U.S. large-cap tech’s rich valuations here, the 50-day chart gives you a reason to lighten up.”

But DataTrek gives more weight to the 100-day view of the Nasdaq-100, with Rabe citing “the now-friendlier approach by the Trump administration” toward trade and tariff policy. A 100-day trading period stretches about 4.5 months, DataTrek noted.

U.S. stocks initially sold off after President Donald Trump announced his “liberation day” tariffs on April 2, but the market rebounded following the White House’s pause on those tariffs and as talks with China resulted in a de-escalation in trade tensions.

The Nasdaq-100 index and the QQQ ETF both closed higher Monday, notching fresh record peaks, according to Dow Jones Market Data.

The longer-term horizon of 100 days shows that the QQQ ETF has “simply been climbing back from the trade shock that resulted in a very unusual downside move,” Rabe wrote. “This catalyst has since been at least partially addressed.”

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Meanwhile, U.S. large-cap tech clearly has price momentum, she added, “and, as we always say, never short a new high.”

The U.S. stock market finished up Monday, with the S&P 500 SPX rising 0.5% to close at at an all-time high. The S&P 500 wrapped up June with a monthly gain of 5%, trailing the Nasdaq-100 over the same period.

The QQQ ETF — whose top three holdings on Friday included Big Tech stocks Nvidia Corp NVDA, Microsoft Corp.MSFT and Apple Inc. AAPL — saw an even larger June gain of 6.3%.

Source: Marketwatch