JPMorgan's Equity Premium ETF goes long the NASDAQ-100 while writing covered calls as a form of yield enhancement. The NASDAQ-100 is a classic example of an asset that could use a little yield enhancement, as it has only a 0.5% yield! Covered call writing limits capital gains, but in an overheated market, it can serve as a prudent hedge.
In financial markets, it's often said that “the trend is your friend.” That's an accurate sentiment as it pertains to the 2024 performance of the tech sector.
ETFs are one of the best investing instruments ever created. They provide instant, liquid access to hundreds of quality companies usually at a very low minimum investment amount, and usually almost-zero fees.
The Invesco QQQ Trust ETF is extremely overbought, with a risk of a significant correction, possibly up to 30% based on historical data. Rare overbought conditions met only a few times in almost 40 years, suggesting potential sideways trading or significant correction for QQQ. Technical analysis indicates a potential end to the recent rally in QQQ, with a possible 20% to 30% correction leading to prices last seen in mid-November.
QQQ Trust ETF might have seen a nice increase so far in 2024, but the risks have risen in line with rising valuations. Among its top 10 constituents, only four are now trading at lower PE multiples than their five-year averages. Of these, there's only a small difference for Alphabet, and Tesla can see further downside. Amazon still has positive potential, and with a more prominent communications sector and less significant consumer discretionary, QQQ can still see some upside. But a pullback is increasingly likely.
High interest rates and investors' desire to see strong balance sheets, buybacks or dividends can act as headwinds to corporate technology expenditures, but there's no getting around the point that some of those expenditures are essential. Put artificial intelligence (AI) in the “essential” category.
Stock-picking is a difficult endeavor. But there are plenty of examples of active fund managers identifying winners.
Stocks have come a long way since bottoming in late 2022. However, data points suggest the bull market still has room to run.
The Invesco QQQ's top 10 holdings include the "Magnificent Seven" stocks. A modest 0.20% expense ratio helps investors keep more of their gains.
In the first quarter, S&P 500 member firms repurchased $236.8 billion worth of their own shares. This marks a nearly 10% increase on a YoY basis.
The ProShares UltraPro QQQ ETF is popular among technology investors, and it's not hard to see why. In less than two months, the ETF has delivered a 50% gain, and this is just the latest chapter in more than a decade of outperformance.
What's next for the Nasdaq 100? Will we see a continuation of the aggressive bull phase that we've observed off of the April 2024 low?