Let The Technology ETF (QQQ) Lead To Stock Gains

Market Summary

The stock market maintains the long term bullish trend starting from the bottom of the market crash in 2009. Investors are satisfied that employment is growing at a decent pace in the private sector and the economy is actually gradually improving. What investors like even more are the Federal Reserve Quantitative Easing (QE) programs. The various iterations of QE began in November 2008 and essentially provide free money to financial firms which they are using to drive the stock market higher. Stocks are still the best investment opportunity compared to other asset classes (bonds, precious metals, etc.). Retail investors are slowly getting back into buying stocks but institutional investors are using the easy money provided by the Fed to take stocks to all-time highs.

Investor Analysis

Many investors are expecting the so called "Santa Claus" rally to push stocks higher into year-end. The technology sector has led the market for most of the year and this group has been hot over the past month. Until we get a confirmed stock market correction betting on the market leaders is considered a solid strategy for generating profits. The chart below displays how technology stocks have moved to all time highs.

Possible Strategy

Invest in the QQQ ETF (NasdaqGM: QQQ) to take advantage of the hottest stock market sector. The QQQ is an exchange-traded fund (ETF) "is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international non financial companies listed on the Nasdaq Stock Market based on market capitalization. By trading like a stock, the QQQ has continuous liquidity, can be short sold, bought on margin, provide regular dividend payments and incur regular brokerage commissions when traded. The QQQ is used by large institutions and traders as bets on the direction of technology stocks. They are also used by individual investors who believe in passive management (index investing). In this respect, spiders compete directly with Nasdaq 100 index funds.

By Gregory Clay