Nasdaq 100 Price Outlook:
Nasdaq 100 Forecast: Exodus from Tech ETF Has Worrisome Historical Parallel
Technology stocks were the driving force behind the covid-recovery rally in stocks, but have recently become an area of weakness for the Nasdaq 100, Dow Jones[1] and S&P 500[2]. Lockdown beneficiaries like Netflix, Zoom, Microsoft and Apple have seen their stock prices falter in recent weeks as investors scrutinize lofty valuations and traders attempt to call a top. The shift in demand for this sector of the market has been reflected in exchange traded fund flows, particularly in the case of the QQQ ETF.
The QQQ ETF, which closely tracks the tech-heavy Nasdaq, saw its largest single-day outflow since October 19, 2000 last Friday when more than -$3.4 billion left its coffers. The withdrawal is the second largest in the fund’s history and helps highlight the conviction behind some of the recent selling pressures in technology stocks.
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That said, the conviction expressed in Friday’s withdrawal is not without a counterpart as the fund saw its second largest inflow on record this Monday, September 21, the next available trading day. Interestingly enough, the sudden exodus and influx parallels the prior records in 2000 as the October 19, 2000 exit was immediately succeeded by an inflow of more than $5.2 billion the very next day.
Evidently, it is not unheard of to have extreme allocation changes in close proximity, and in fact it may suggest the flows are indicative of broader market themes than a one-off event. In October 2000, the Nasdaq fell by nearly -10% and was in the midst of the bursting of the Dot Com bubble. Collectively, the Nasdaq declined roughly -35% in 2000, which also
