Since January 2012, the PowerShares QQQ Trust Index has traded within a $60 to $70 range. Here at MarketConsensus News, we have received quite a number of questions about the QQQ and whether investors should consider it a buy or a sell. So, we decided to draft a quick read article explaining this popular ETF and our perspective on whether it makes a great investment.

What is the QQQ?

The QQQ index is an Exchange Traded Fund that tracks the NASDAQ 100. As stated on, “The NASDAQ 100 Index includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization”. The QQQ index is managed by Invesco PowerShares Capital Management LLC.

QQQ PowerShares Trust Series - Is the QQQ a Buy, Sell or Hold - Copy

QQQ Index Holdings Information

Investing in the QQQ allows investors to diversify their holdings across major technology industry groups, including Telecom, Computer Hardware & Software, Retail & Wholesale, and Bio-Technology. The ETF is tradable in the same way as stocks. Investors can buy, hold, sell or short the ETF.

The QQQ index is the most traded security in the world with a 90-day average daily trading volume of 66.8 million shares.QQQ - Index Holdings Information as of 12.31.2012


Performance of the QQQ

Over the last 12 months, the QQQ has not outperformed the markets. Rather it has moved on par with the DOW (^DJI), S&P (^GSPC) and Nasdaq (^IXIC).

Dow, SnP and Nasdaq
Yahoo! Finance

Year-to-Date (YTD) for all 4 Indices

However, from Year-to-Date (YTD) perspective, the QQQ looks to be underperforming the three major indices. Since the beginning of the year, the DJIA has advanced 6%, the S&P is up 5% and the Nasdaq is up 4.5%. The QQQ is only up 3%.

QQQ vs. Dow, Nasdaq - YTD
Yahoo! Finance

Trading Perspective

The QQQ seems to be performing well from a trading perspective. As mentioned earlier, the ETF has traded within a $60 to $70 bandwidth. From a technical perspective, investors will do well if they buy the index around the $62 range and sell or short the ETF when its price crosses above the $68 level (2012 Peak Line).

Dow, S&P and Nasdaq - 1 Year Chart

Currently, a lot of investors are ringing the warning bell that stocks are getting too overbought and the markets may be due for a major correction. Looking back at the above chart, we notice that the QQQ price is reaching a level where it has historically peaked, which might be in line with the warning that the markets might be reaching the end of the current bull-run.