I'm enjoying current all-out rally. Dow Jones and S&P 500 broke above November lows and trade above 13 days moving average and 50 days moving average. But there is a bigger story here.
Nasdaq 200 index is also trading above 13 and 50 day moving averages. But there is a difference: Naz didn't make a significant new low in March. It's low on March 9 is 1260, it was at 1314 on Nov 20 (4%). Compare that to Dow Jones, which was 13% lower on March 9 than on November 20, or to S&P (10%).
Naz also returned to it's old range 1400-1600, in which it has been trading since November, when both Dow and S&P are now at the bottom of the old ranges.
This behavior has good fundamental background. When Dow includes several financial disasters, like CitiGroup (C), Bank of America (BAC) or industrial disaster GM, Nasdaq doesn't have big percentage of banks in it. On other hand, it has a lot of tech companies, many of which have excellent balance sheets, no debt, quite often huge piles of cash, like Apple (AAPL) Google (GOOG) or Microsoft (MSFT). Valuations of tech companies are ridiculous, unlike many others, they make real big profits.
Of course, there is a giant question: can Naz grow if Dow and S&P stop in the current range? I think it can. Yes, current market is mostly technical. But sooner or later any market returns to fundamentals, and tech fundamentals are so much better than anybody else's.
I'm going to scale in tech now. Obvious targets would be: increasing Google and maybe Apple positions, starting Netflix (NFLX) and Amazon.com (AMZN). But I'm going to look into new names in tech as well.
Full disclosure: at the time of publication author had long positions in AAPL and GOOG and no positions in other stocks mentioned. Positions can change any time.