SpaceX just filed. The clock is ticking. (From The Oxford Club)

Numerous factors suggest significant upside is coming for the QQQ ETF (NASDAQ: QQQ) and the NASDAQ Composite Index, which it tracks. Signals from technicals, earnings, valuation and sell-side interest point not only to upside potential but also to an extended rally that can add triple-digits to portfolios over time. 

#1 The Technical Signal Is Unmistakable 

The QQQ ETF, like the underlying index, is showing an unmistakable chart signal in early Q2. The Q1 pullback, which took the ETF into correction territory, appears to be over, with early Q2 activity including a rebound and bullish trend-following indicators. The indicators begin with volume, which is elevated on a trailing 12-month basis relative to the preceding 12 months, ramping even as price action declined. 

The volume signal and the early April rebound confirm support at a technical target set in 2025 and align with a trend-following entry. The signal is compounded by the stochastic and MACD indicators, which reflect oversold conditions and a rebound within an uptrend, aligning with prior trend-following signals. The likely outcome is that the market continues higher over the ensuing weeks and months; the only questions are how high and what might drive it to a new high.

#2 The Earnings Outlook Is Robust

The earnings forecast is as bullish as it can get for a stock market index. Analysts are not only forecasting growth, but sequential acceleration, and the estimates have been rising. This provides a triple-tailwind for market sentiment, with much of the growth centered in big tech and AI, specifically NVIDIA (NASDAQ: NVDA). It, among the top five stocks in the ETF, is forecast to grow earnings by over 120% in Q1 and 75% for the year, more than double the next-hottest grower, Tesla (NASDAQ: TSLA). Tesla's outlook is predicated on EV sales, which have been lackluster over the past quarters. In between lies Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN), which are expected to grow earnings by an average of 12% in Q1 and 15% for the year. 

#3 This Is the Cheapest Tech Stocks Have Been for Over a Decade

Stock price advances aside, the tech complex, beginning with NVIDIA, is as cheap is its been in over a decade. NVIDIA, nearly 9% of the QQQ ETF holdings, trades at under 22X its current-year earnings projections, well below the QQQ average of around 31X, and a similar value is present among the remainder of the top five. Each offers a double-digit near-term upside and a triple-digit long-term upside, with the 2035 forecasts putting them near 7X earnings. The most highly valued of the group is Apple, but even it provides value, trading below the ETF average and near its historical lows. The takeaway is that these stocks' valuations have been deflated, with no premiums attached, providing an ample runway for prices to advance over time. 

#4 Institutions Are Buying These Stocks Because of Value and Outlook

The institutions underpin the stock price action, with this group owning 60% to 80% of the top five ETF holdings. MarketBeat’s data show they have been buying on balance for at least two quarters, with volume spiking in Q1 2026. The volume spike aligns with the ETF price pullback and pullbacks in the underlying stocks, suggesting that institutions bought the dip and will limit downside in Q2. With this in play, the ETF may experience volatility in April and May but will ultimately move sideways and then higher as the quarter progresses, assuming no new bad macro news emerges.

#5 Outperformance Is the Catalyst in Q2

There are numerous catalysts to drive stocks in Q2, but the single most important will be outperformance. The NASDAQ Composite tends to outperform its consensus estimate by a few hundred basis points each quarter, and there has been a structural disconnect for over a year. The market continues to underestimate AI demand and AI spending, suggesting Q1 2026 results will be far stronger than expected, with solid guidance. The biggest risk is oil; oil prices are well elevated and may cut into profits and the outlook. The caveat is that the negative impact may be short-lived, as there is hope that the Iran conflict will end quickly. 

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