PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) — This ETF tracks the Nasdaq 100, which contains 100 of the largest nonfinancial companies listed on the Nasdaq Composite. Its top holdings include: Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Google Inc (NASDAQ:GOOGL) and Gilead Sciences, Inc. (NASDAQ:GILD).
QQQ provides investors with a diversified way to participate in the technology sector and has outperformed the broader market over the past year, up 21% compared to 11% for the S&P 500. However, near term, this ETF carries above-average risk.
Shares peaked at $109.42 on March 2. After a pullback, the next rally failed to penetrate the high, creating an unfavorable technical condition. The subsequent sell-off was accompanied by higher volume. And despite Thursday’s intraday rally, QQQ failed to close above its 50-day moving average at $105.46.
But QQQ is approaching a major support zone bounded by its 200-day moving average at $100.47 and a support line at about $103. A penetration of this zone could result in a test of the twin lows just below $100, where we received strong buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR).
Investors who want to own QQQ should place a good ’til cancelled (GTC) order below $102 with a six-month trading objective of $115 for a 13% return. A stop-loss order should be entered at $97.
With its low management fee and expense ratio, Morningstar gives the fund a “5-star” rating. QQQ offers a 12-month yield of 1%.
