Buy This, Not That: QQQs Will Lead the Bounce When Trade Wars Cool

Shah Gilani|April 9, 2025

Markets are in full panic mode as Trump’s tariff tsunami washes over Wall Street.

The Dow has plunged thousands of points…

The Nasdaq has officially entered bear market territory…

And the S&P 500 is down over 15% from its February highs.

Analysts are calling it the “Tariff Tantrum.”

But is this market chaos creating opportunity?

Small caps in the Russell 2000 have been absolutely hammered, down over 20% from their peak and officially entering bear market territory.

The tech-heavy Nasdaq 100 has shown surprising resilience even amid supply chain nightmares for companies like Apple.

So, which index is primed for a bigger bounce if trade tensions ease?

Click on the thumbnail to check out today’s video.

 

TRANSCRIPT

Hey, everybody.

Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

You may have noticed I’m wearing some camo because it’s dangerous out there.

You want to stay below the bullets, and there are a lot of them flying around.

A lot of you asked: What would bounce sooner – the Russell 2000 or the Nasdaq-100 – if Trump were to backtrack on these tariff wars?

Well, that’s a good question. Let’s take a look.

First up, I’m going to give you something to look at.

I’m pulling up the one-year chart for the Russell 2000 for you.

As you can see here, with some trend lines included, this beautiful channel is in the Russell 2000 through the IWM ETF.

And you can see in the one-year chart here that it’s pretty nice action, but really not great in terms of how steep that is.

When we break down through here (at the lower end of the channel), we see ugliness follow.

The Nasdaq-100, embodied in the QQQs, looks like this on a one-year chart.

It’s a bit steeper, but still ugly, but we know that.

What’s more interesting to look at isn’t the one-year chart, but the three-year chart of both.

Here’s a three-year chart.

This is a bull market.

The Nasdaq-100, in the QQQs, was up from 108% of its lows here (in 2023) to its high.

It’s now fallen from its highs here, back on February 17, 2025, down 23%. So, yeah – that’s a bear market move.

Now, the IWM, on the other hand, for its three-year bull run, was up only 52.2%.

So, there was a lot of sideways action.

It really only started moving off this bottom here in 2023.

It started moving up in the fall of 2023 (October), and we had a nice little channel here that’s now broken down.

But while the QQQs were up 108% in their bull run, the IWM – the Russell 2000 – was up only 52.2%, half of what the QQQs were up.

Since it fell, it has now gone down 30%. The QQQs are down 23%.

So, which should you buy and which one should you not buy?

If you’re looking for a bounce, people, especially if it’s going to be sustainable, I would absolutely, unequivocally buy the QQQs because they’ve had a much longer, better, steeper move higher. They will likely bounce faster.

Why?

Yes, it’s big tech. And big tech has fallen off a cliff.

Yet, they’re still great companies, whether you’re talking about the Magnificent Seven or the other big Nasdaq-100 companies.

And don’t forget: the Nasdaq-100 consists of the 100 largest capitalization non-financial stocks.

So you got big tech and no financials.

And guess what?

That’s where the money has been going for years and years. And if we see a bounce, that’s where it will bounce back to.

The IWM (the Russell 2000) is sloppy because it’s primarily small- and mid-caps.

And guess what?

It’s not going to do nearly as well because a lot of these companies have a hard time financing their debt – especially with higher interest rates.

Interest rates are going to remain higher for longer.

So, the IWM will have a problem coming down and an even more difficult one coming up.

Yes, it can have some bounces, but in the long term, it’s not going to move like the QQQs are going to move.

So, as far as this week’s BTNT: if you’re looking for a bounce, people – especially if it’s a sustainable bounce, maybe getting back into a bull market zone – then you want to bet on the QQQs, not IWM.

That’s it for this week. Need I say, be careful out there.

Catch you guys next week.