Nasdaq 100 ETF Sees Largest Inflow Ever as Index Wrestles With Losses

Nasdaq 100 Price Outlook:

Nasdaq 100 ETF Sees Largest Inflow Ever as Index Wrestles with Losses

The S&P 500, Nasdaq 100 and Dow Jones have enjoyed little progress in recent sessions as stocks gyrate between recent levels despite encouraging remarks from the Federal Reserve last week. The Nasdaq 100 has seen its losses outpace those of the S&P 500 and Dow Jones as traders continue to weigh sectoral tradeoffs. Despite the Nasdaq’s underwhelming week, investors signaled remarkable demand for the fund as the QQQ ETF registered its largest single-day inflow ever on Monday.

Nasdaq 100 Price Chart & QQQ ETF Flows

The inflow totaled more than $4.9 billion and reveals market participants are eager to gain exposure even as price languishes. Whether the demand was driven by takeaways from the Fed’s March meeting, another round of stimulus checks or the curator’s aggressive advertising of the fund in March Madness television coverage is unknown, but the capital movement is undeniable.

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Considering past inflows of note, it can be argued most occur in times of heightened volatility and do not necessarily mark an absolute bottom in the index’s price. Either way, past performance is not indicative of future results and headwinds to the technology sector remain. To that end, conversation surrounding taxation and regulation of big tech companies has grown and potential infrastructure spending may benefit other areas of the market rather than technology.

With that in mind, the popular rotation trade that has seen the Dow Jones outpace the Nasdaq 100 might continue despite record demand for technology exposure through QQQ. In the year-to-date, QQQ has clocked only $3.4 billion in net inflows as stocks like Apple and Amazon struggle to regain their footing. Elsewhere, Treasury yields have seen their gains slow amid cooling inflation expectations and the 20-day moving average of fund flows for an aggregate US bond fund has climbed to its highest level since January.

Still, measuring fund flows in a few corners of the market cannot fully capture the intentions of market participants but it does help to highlight slight tweaks or oddities that might hint at developments in broader themes. While these themes unfold and tech stocks look to regain their luster, follow @PeterHanksFX on Twitter for updates and analysis.

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–Written by Peter Hanks, Strategist for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX