Investors should be monitoring the NASDAQ Composite, NASDAQ-100 and related exchange traded funds as the tech-heavy Nasdaq recently made new highs but is showing signs of backing off those record levels.
The PowerShares QQQ (NasdaqGM: QQQ) is tracks the widely followed NASDAQ-100, an index that is home to tech and Internet darlings such as Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB) and more. The First Trust NASDAQ-100 Equal Weighted Index Fund (NasdaqGS: QQEW) is the equal-weight answer to the popular QQQ.
Impressive earnings reports have recently helped lift the technology sector and ETFs such as QQQ. Historically, after a profit falloff, the technology sector has been among the best areas in a rebound. Another catalyst is the tech sector’s status as a cyclical sector. Cyclical groups historically perform well as interest rates rise.
However, there are some technical issues on the NASDAQ investors need to monitor.
“Take Thursday’s dramatic reversal lower in the stock market, for example. Specifically, the NASDAQ was well into new all-time high ground at one point during the day,” according to ETF Daily News. “However, by the end of the day, the index has lost all of its gains and then some, closing well into negative territory. Upon a glance at the day’s bar or candlestick on its chart, one might understandably be concerned about residual negative consequences stemming from the day’s action.”