PowerShares QQQ Trust, Series 1 (ETF) (QQQ) — This fund tracks the Nasdaq 100, which is made up of 100 of the largest nonfinancial companies listed on the Nasdaq Composite. The top 10 holdings in QQQ are Apple Inc (AAPL), Microsoft Corporation (MSFT), Amazon.com, Inc. (AMZN), Facebook Inc (FB), Google Inc (GOOG), Gilead Sciences, Inc. (GILD), Google Inc (GOOGL), Intel Corporation (INTC), Cisco Systems, Inc. (CSCO) and Comcast Corporation (CMCSA).
Morningstar rates QQQ a five-star fund, but because of its focus on technology stocks, it can be volatile compared to other ETFs. It has a very low management fee and expense ratio, and a yield of about 1%.
QQQ advanced from a closing low of $99.65 in January to a closing high of $110.96 in May. However, on Monday, it closed below the intermediate trendline at just over $108 and the 50-day moving average at $109.25
This break of a major trendline and moving average was followed Tuesday by a weak rally. Volume was lower than the preceding two down days, and a bounce of just 0.4% compares unfavorably to the total decline of 2% from Friday’s close. Thus, we can consider it a dead cat bounce.
The next support is the 200-day moving average at $104.58, which is close to the 61.8% Fibonacci retracement of the January-to-May advance at $103.95.
Since QQQ is currently in a correction within a bull market, place a good ’til canceled (GTC) limit order to buy at $104. My six-month trading target is $114. This investment is also suitable for long-term holders with the potential for a much higher return.
