QQQ and SPY Rise On Apple's Legal Victory


Shutterstock photo

Major ETFs rose slightly in quiet trade Monday as the market awaited the central bankers meeting in Jackson Hole, Wyo. for clarity on what they'll do to support the economy.

In afternoon trade, theSPDR S&P 500 ( SPY ) added 0.18%.

SPDR Dow Jones Industrial Average ( DIA ) was nearly flat, down 0.07%.

PowerShares QQQ ( QQQ ), a basket of the 100 largest nonfinancial stocks on the Nasdaq, rose 0.24% thanks in part toApple's ( AAPL ) 2% gain following its legal defeat of Samsung. The consumer tech giant accounts for nearly 20% of the QQQ and about 4% of SPY.

Market strategists overall see a running of the bulls and expect the Federal Reserve to unleash more quantitative easing.

Alex Gurvich, managing partner at the Rockledge Group in New York, expects the recent rally to continue as the market awaits Fed chief Ben Bernanke's speech this week, which may confirm more economic stimulus is on the way.

Should the market hold at its 2012 highs, a big short-covering rally could drive the S&P 500 to its next level of price resistance at 1576 or its 2007 high, up 10% from the current level, says Douglas Stewart, a portfolio manager at Sherwood Forest Capital Management in Richmond, Va. Short-covering occurs when traders, who bet on profiting from declines, have to buy shares to close their positions.

"The Fed has made it abundantly clear that if something bigger to the downside occurs, that they will be there to rescue the markets, so as to prevent another leg down in the confidence in the domestic economy," Stewart said.

The S&P 500 may top 1500 over the next two months and hit an all-time high in the first quarter of 2013, says Mark Arbeter, chief technical strategist at S&P Capital IQ.

"Market conditions are ripe for a new secular bull market to emerge, potentially ending the massive trading range that has been in place since 2000," Arbeter wrote in his weekly technical report. "A break to new recovery highs will force some bearish advisers and investors to throw in the towel, adding fuel to the stock market rally."

Expect the S&P 500 to pull back briefly and rebound to new highs, says Randy Frederick, managing director of active trading and derivatives at Charles Schwab.

"( A ) small pullback in the S&P is by no means a problem in a market that is up 10% in three months and hasn't even had a 1% down day for 24 straight sessions," Frederick wrote in a media note. "Remember, markets never go straight up and small pullbacks are healthy as they often help to avoid bigger ones."

"With the European Central Bank, the U.S. Federal Reserve, the Peoples Bank of China, and even the Brazilian government, standing in the wings ready to take action to support their respective economies, the downside risks in the market remain quite low, so, in my opinion, the greater risk is still in missing out on the upside," Frederick added.

Despite the market's robust gains this summer, retail investors keep flocking to safe havens in gold, high-yield bonds and municipal bonds. Gold and precious metals fund inflows hit a 29-week high, according to EPFR Global. Municipal and mortgage-backed bond funds extended their current inflow streaks to 51 and 75 straight weeks, respectively. Inflow into bond funds totaled $4.9 billion -- of which 61% flowed into U.S. bond funds. That's while $847 million was pulled from equity funds.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing ETFs
Referenced Stocks: A , AAPL , DIA , QQQ , SPY

More from Investor's Business Daily


Investor's Business Daily

Investor's Business Daily

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com