Over the past several quarters, the SIA platform has detected a shift in sentiment toward Chinese equities, generally reflected through SIA relative strength alerts for stocks and ETFs that have been rallying into the favored zones of various SIA reports. For those seeking context, names such as GDS Holdings Ltd. (GDS), Tencent Music Entertainment (TME), Alibaba Group Holding (BABA), QFIN Technologies (QFIN), KraneShares CSI China Internet ETF (KWEB), BMO China Equity (ZCH.TO), Kingsoft Cloud Holdings (KC), and KraneShares SSE Star Market 50 (KSTR) can all be found on the SIA platform via the Asset Allocation tab and the Daily Stock Report archive. Today, we highlight another name that has risen to the top of the SIA International Equity Universe ETF Report, securing the 3rd spot: Invesco China Technology ETF (CQQQ), which mirrors the USA tech-leaning QQQ ETF. Units of CQQQ entered the favored green zone of the aforementioned SIA report in late September 2024 and have remained in the top of the favored zone over the past several quarters. This index also gained global attention in early February when DeepSeek, a Chinese artificial intelligence (AI) startup, made headlines worldwide by topping app download charts and causing U.S. tech stocks to decline, many of which later recovered to their prior highs. Before diving into the point and figure chart of CQQQ, let's first examine the point and figure chart of the Nasdaq Composite Index, which may be competing for the same capital as this portfolio of Chinese technology firms that are making bold claims to be more efficient with their technology developments than their American counterparts. In the attached NASDAQ chart, a potential quadruple top formation is evident around the whole number level of 20,194. This important resistance level has been a challenge for the NASDAQ since the start of 2025. However, if buyers push the NASDAQ above this level, the next potential resistance level is 22,306, based on a vertical count above the prior breakout column of X in December. Support is currently at the 19,023 level, with additional support identified at 18,464, and multi-year support visible only at the 16,386-16,063 zone, highlighted in light green on the attached chart. Another key observation is the change in leadership within the favored zone of the SIA NASDAQ 100 Index Report. Names such as Nvidia, Broadcom, and other leading semiconductor stocks are now in the unfavored zone, replaced by companies from different sectors, including coffee retailer Starbucks (SBUX) and media company Warner Brothers Discovery (WBD). While technology names like Netflix (NFLX) and Meta Platforms (META) remain, the leadership within the NASDAQ 100 has undergone significant rotation. One final note is the high SIA SMAX score, which remains elevated despite this leadership change. This may indicate continued dominance over asset classes like cash, bonds, currencies, commodities, and other equity benchmarks.
Next, we turn to the point and figure chart of the CQQQ ETF, which illustrates a potentially long bottom-forming consolidation that has occurred in China over the past four years, following a sharp decline in 2021 from elevated levels. Unit prices are once again approaching a quadruple top at $51.33—a level that, if reached, could signal higher resistance at $58.96. While the NASDAQ chart above shows blue sky above its quadruple top formation, the CQQQ chart potentially faces significant overhead resistance, as previous holders of the ETF may be eager to sell into strength. From a support perspective, shares of CQQQ benefit from long-term support levels established during prior consolidation periods, with potential support at $45.58 and $43.81. A zone of long-term support between $40.47 and $37.39 is also highlighted in light green, extending back to lows reached in 2020. This is all set against the backdrop of a high SIA SMAX score of 10/10, which, while a near-term reading, underscores the strength of CQQQ relative to other asset classes.
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