Nasdaq 100 (QQQ): The EMA100 to be tested soon

Invesco ETF Nasdaq 100 - QQQ - 03/12/2018

Short Term strategy: Negative (20%) / Trend +
Long Term strategy: Neutral (50%) / Trend =

Characteristics of the ETF

The QQQ ETF (Powershares), which is quoted in USD on the Nasdaq, replicates the Nasdaq 100 index which is composed of the top 100 non-financial US stocks, mainly in the technology sector and listed on the Nasdaq, selected according to the importance of their market capitalization.

The ETF fees are 0.2% and the AUM is very high at $66bn. Replication is direct (physical) and there is a dividend distribution policy.

Alternative ETFS: ANX (Amundi in Euro), UST (Lyxor in Euro), CNDX (iShares in USD)

Latest developments

The Nasdaq100 rose by 31.5% in 2017, the largest annual increase since the 2009 rebound, and the increase continues in 2018 (+8 .6% since the beginning of the year) despite the strong correction in GAFAs, which are undergoing very strong profit taking after spectacular journeys, while companies like Microsoft and Intel are more resilient.

Concerns are more pronounced on Facebook whose busines model based on user data could be challenged by the regulator or as Apple and the semiconductor sector that are particularly exposed from a supply chain and end markets to China, while the growing rivalry of the two major powers could compromise GAFA access to the Chinese market.



Index & components

The top 10 stocks in the index, including Apple, Amazon, Alphabet, Facebook and Microsoft, account for about 57% of the market capitalization of the index, while Apple alone accounts for 10.8% of the index.

The interest of this index lies in the fact of taking a diversified bet but concentrated on the most beautiful technological stocks, giving a good share to the "GAFA" (Google, Apple, Facebook and Amazon) which represent 34% of the capitalization.

The index is particularly influenced by Apple's prices, which fluctuate according to the success of its new smartphones. Note that large technology stocks have generally performed very well in 2017, especially GAFA but also semiconductors (Intel) and Microsoft. Large biotech stocks such as Gilead and Amgen have bounced back recently after a long period of wavering. However, the attractiveness of US biotech companies remains significant at a national level, and these are prime targets for major US laboratories, as well as an alternative to transcontinental operations.

The volatility of the index is not very marked, which reflects the considerable weight of market capitalizations often above $ 300 billion for the top 10 companies, see $ 500 billion for the top 5.

But the Nasdaq 100 is not just about its top 10 stocks, and the depth of the index makes it possible to invest in companies that are already established but still have a strong appreciation potential like Tesla, Xilinx or Symantec.

The hegemonic position of the GAFA in the world begins to provoke reactions, especially in Europe, both on competitive positions or abuse of dominant positions could trigger heavy fines, as for Google (€4.3bn fine by the EC), but also on taxation while European countries seek to find an agreement to tax the revenues generated on their territory.

Chinese competitors are becoming more and more present, such as Alibaba or Tencent, and could soon threaten the supremacy of the leaders of American technology.

Weekly data

The weekly chart shows this week's strong counter-strike against MMEs 13 and 26, which crossed lower. MMEs 13 and 26 are descending and are positioned between 1.5 and 4% above current prices. Most likely is a failure of the current rebound on any of these levels. It would be necessary for the index to manage to return above the 7250 pts zone so that a recovery of the medium-term uptrend could be considered.

Daily data

On the daily chart, we can see the short-term recovery of the index which has managed to return above the MME26, with a reversal of the oscillators. However the MME100 located at 7100 pts and which is descending should represent a serious obstacle for the current rebound, and certainly its main test in the days to come.

ETF Objective

QQQ in an ETF, listed in USD, which seeks to replicate the Nasdaq100 index (103 US companies)


Inception date 10/03/1999
Expense ratio 0,2%
Benchmark Nasdaq 100
Issuer Invesco
Ticker QQQ
ISIN US73935A1043
Currency $
Exchange Nasdaq
Assets Under Management 65 965 M$
Replication method Direct (Physical)
Dividend Distribution
Currency risk No
Number of Holdings 103
Risk 3/5

Country Breakdown

USA 100%

Sector Breakdown

Information technology 42%
Communication services 22%
Consumer discretionary 17%
Health Care 10%
Consumer Staples 6%
Industrials 2%

Top Ten Holdings

Apple 11%
Microsoft 11%
Amazon 10%
Alphabet 9%
Facebook 4%
Intel 3%
Cisco 3%
Comcast 2%
PepsiCo 2%