ETF Trends
ETF Trends

The S&P 500 and the Dow Jones Industrial Average have each traded lower over the past month, stoking talk of a growing risk off environment. The NASDAQ Composite has something to say about that.

Quashing some of that risk off speculation, the NASDAQ Composite hit a new 52-week high Monday, something the S&P 500 and Dow could not boast of despite impressive showings. Don’t look now, but the NASDAQ composite is within spitting distance of its all-time closing high of nearly 5,048.62 seen on March 10, 2000.

Of course that is good news for the PowerShares QQQ (NasdaqGM: QQQ), the NASDAQ-100 tracking ETF. QQQ, the fifth-largest U.S. ETF by assets, also hit a new 52-week on Monday, bringing its three-month gain to north of 10%, or roughly double the returns of the S&P 500 over the same period. QQQ is up nearly 3% since we noted in late July the ETF was facing some crucial tests, ones the fund has clearly handled with aplomb. [QQQ Faces Big Tests]

Further dismissing talk of a risk off world, QQQ hauled in nearly $848 million in new assets for the three months ending Aug. 17, according to PowerShares data. That is more than any other PowerShares ETF over the same period.

Remember, this is an ETF that was riddled with outflows earlier this year with a combined 78% weight to technology and consumer discretionary stocks, QQQ fits the bill as a risk on ETF. A 14.5% weight to the health care sector, the bulk of which comes by way of biotechnology offerings, confirms as much. [Ahead of Earnings, Tech ETFs try to Rally]

Adding to the risk on ebullience is this nugget: Only one of QQQ’s top-10 holdings, a group that combine for about 51% of the ETF’s weight, has traded lower over the past 90 days. That dubious honor belongs to Qualcomm (NasdaqGS: QCOM).

However, even in the impressive double-digit gains over that period by the likes of Apple (NasdaqGS: AAPL) and Microsoft (NasdaqGS: MSFT) a combined 21.5% of QQQ, look paltry compared to the average three-month gain of 26.4% for Facebook (NasdaqGS: FB) and Gilead Sciences (NasdaqGS: GILD). Gilead and Facebook are QQQ’s seventh- and eighth-largest holdings, respectively.

Strength for the NASDAQ Composite and QQQ is trickling down to other ETFs, too. On Monday, fewer than 20 ETFs hit new all-time highs, but included in that group were five NASDAQ-related ETFs. The Ultra QQQ ProShares (NYSEArca: QLD) and the ProShares UltraPro QQQ (NasdaqGM: TQQQ), the double- and triple-leveraged equivalents of QQQ, were in the new all-time high group.

Even the First Trust NASDAQ-100 Ex-Technology Sector Index Fund (NasdaqGM: QQXT), which as its name implies excludes tech stock, hit a new all-time high Monday on volume that was more than double the daily average.

Said another way, no Apple, no Microsoft, no problem for QQXT. QQXT’s bullishness also bolsters the case for biotech’s resurgence as the ETF is overweight health care by about 670 basis points relative to QQQ. [An All-Time for This Nasdaq ETF]

PowerShares QQQ

 

Tom Lydon’s clients own shares of QQQ, Apple and Facebook.