We’ve recently seen how the Nasdaq-100 has hit high levels that we’ve not seen since the year 2000. This is a good sign as it proves that the components of this index are doing well in their respective balance sheets.

However, the general opinion is that the technology sector is the main component and catalyst of this bull market. This has been so for many years and is currently changing.

NASDAQ SANS TECH STOCKS

Lately, the biotechnology stocks have been outperforming the traditional tech industry.

 We can see this when we compare two ETFs to trade the Nasdaq 100. The first is the very well-known Powershares QQQ Trust (QQQ) against the First Trust Nasdaq-100 Ex-Technology Index Fund (QQXT). The latter is an instrument for investors who wish to trade the Nasdaq 100 excluding the tech industry.

QQXT allocates 21.2% of its weight to the health care sector compared to 13.9% for QQQ. The only potential drawback is that QQXT also allocates 45.3% weight to consumer discretionary, which is more than double that of QQQ. The danger would only be real if stocks like the high-flying Tesla (TSLA) continues falling and companies like Amazon (AMZN) and Comcast (CMCSA), to name a few, experience a heavy price retracement.

WEEKLY CHART

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BOTTOM LINE

For those investors who are currently trading QQQ, this is an opportunity to diversify their portfolio within the same index by trading QQXT.

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Learn more about Daryanani’s analysis on the MACD indicator here