Already up 5.2% this year, a significant advantage over the S&P 500 and the Dow Jones Industrial Average, the PowerShares QQQ (NasdaqGM: QQQ), the Nasdaq-100 (NDQ) tracking ETF, could be cruising toward a big technical breakout.
“When looking at performance over the past 1, 2 and 5-year time frames, the NDX 100 has out performed the S&P 500 and Small Caps (Russell 2000) in each of these time windows,” said Chris Kimble of Kimble Charting Solutions.
In the chart below, Kimble points out that the Nasdaq-100 is attempting “to break above monthly closing highs in 2000, represented by line (1) and a resistance line (2), which is tied to the lows in 1990, 2002 and 2008. These lines both meet at price point (3).”
Up 24% over the past year, QQQ currently resides just pennies away from its all-time high. Tech-heavy QQQ has been buoyed by investors’ preference for growth over value stocks this year. In terms of new assets added, growth ETFs topped their value counterparts in the first quarter. Through the first two months of the year, large-cap growth ETFs saw inflows of $1.3 billion, nearly double the sum investors sent to large-cap value ETFs. [A Star Among Growth ETFs]
Though it is often viewed as one of the so called Apple (NasdaqGS: AAPL) ETFs, which is accurate given its 14.5% weight to the iPad maker, QQQ has also benefited from its large healthcare exposure. In the case of a Nasdaq ETF, that means significant biotech exposure. Healthcare is QQQ’s third-largest sector weight at 15.4%. QQQ is home to nine biotech stocks, two of which, Gilead Sciences (NasdaqGS: GILD) and Amgen (NasdaqGS: AMGN), reside in the ETF’s top 10 holdings. [The Evolution of QQQ]
“The NDX remains the leader of the pack from a performance perspective. A breakout would be a positive for the Tech sector and could influence other markets U.S. markets in a positive way,” said Kimble.
Unfortunately, investors are missing out. Confirming that ETF inflows are not always an accurate gauge of performance, QQQ has bled $3 billion in assets this year. That after the ETF lost $11.2 billion in assets in 2014 while it gained 19.2%.
Powershares QQQ
Tom Lydon’s clients own shares of Apple and QQQ.