Outflows Jump in Technology Funds
Outflows from PowerShares QQQ Trust Series 1, which tracks the NASDAQ 100 Index, topped $3.7 billion for the five sessions ending 28 July, the most since early November 2007.
Such moves in volume can signify coming volatility as investors shuffle positions in and out of sectors.
Why did it do this?
Despite a generally impressive round of earnings results for such tech heavyweights as Amazon.com, investors are perhaps starting to get nervous around the high valuations.
The NASDAQ has outperformed the S&P 500 index by 10% already so far in 2017, and many investors will use the earnings season as cover to start taking some profits off the table and reducing portfolio risks.
What now for the NASDAQ?
While clearly still in an eight-year uptrend, tangible fundamental results are likely to be needed going forward to continue the march higher.
In the short term, that might mean a correction rather than a crash. Or the index may just continue to ever greater heights.
Picking market tops is not easy…
But should we see any sustained pick-up in volatility, the stretched valuations in this sector are likely to see it hit the hardest. And that’s the primary reason for investor wariness right now.
Analyst, Money Morning
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