an tSionna 7.01.09

Stocks ended yesterday with their best quarterly performance since 1998. Even so the Dow and S&P are basically flat for the year. I know most of us would take that after how they performed last winter!

Despite yesterday's tepid performance, the Nasdaq has been the stellar performer year to date. Above is a chart of the Nasdaq 100 index {QQQQ} showing its trading range going back to last year {Pink lines-you can double click the chart to make it bigger}. Notice that QQQQ has finally performed a golden cross. That is it's 50 day moving average is trading above its 200 day average.

Its 50 day average had traded below this line for almost a year so this is a positive development longer term. Shorter term the index is overbought so I wouldn't be surprised if it flopped around for some time, which is what I think the market might do for the rest of the summer. That is I think stocks could trade in a 5-10% band now between July and sometime after Labor Day. However unless this signal is negated shortly by stocks taking a turn for the worse, it is an indicator that the Nasdaq and particularly its technology components could outperform other sectors of the market later in the year.

Not a recommendation to buy or sell this index, nor is this a prediction that it will continue to outperform or even go higher from where it is right now. Rather I wanted to give you a heads up on what I'm seeing in the context of looking at how money is flowing into and out of stocks.

*Long QQQQ and other related Nasdaq and technology ETFs in client and personal accounts.