quite some time, all the while confounding those who have been skeptical of even the existence of a bull market. Short-term, the averages are technically overbought to a degree seldom seen. For example, the PowerShares Trust QQQ Series 1 (NASDAQ: QQQQ) has stood above its 10-day moving average for 42 days in a row, the most since the ETF was conceived in early 1999, and well past the previous high of 28 days. Along these lines, we would note that the unexpected is what is worth paying attention to, and in particular, any sort of message that this — the market’s extreme resilience — may be giving,” Kevin Marder Reports From MarketWatch.
Marder goes on to say, “The message is believed to be all about the U.S. economy, i.e. that it will prove stronger in the second half and into 2011 than is commonly expected. By the time this is widely accepted, we believe further upward revaluation will have taken place. We have witnessed this many times, a number of which have been chronicled in this space, beginning in 1996. The message is never known at the time; this is due to the market’s discounting mechanism, which prices its outlook for the next six- to- nine- to perhaps as much as 12 months into today’s prices. This forward-looking mechanism is why general market analysis based on today’s fundamentals alone makes it difficult to stay ahead of the curve and anticipate trends.”
“One favorite forward-looking indicator is the action of retail stocks. Since retail sales comprise about one-third of the economy, an index of retailers can provide a valuable look at the market’s expectation for consumer spending, itself about 70% of gross domestic product. Indeed, the solid outperformance of retail stocks beginning in November 2008 was one contributor to our April 19, 2009 report that a brand-new bull market had begun on March 6, 2009. The chart below also shows how retail stocks began seriously outperforming the Dow Jones Industrials (INDU) on Jan. 19. This has provided us with confidence that a double-dip recession is not in the cards,” Marder Reports.
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Here are some details on the PowerShares Trust QQQ Series 1 ETF (NASDAQ: QQQQ) including the top holdings within the ETF. Investors should note that Apple Inc. (NASDAQ: AAPL) is weighted heavily in the ETF to the tune of 16.80% and may have played a factor in the results stated above.
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