'Long Nasdaq' Trade Swaps Bullish Dollar Trade: Top 5 Picks
Zacks Investment Research | May 16, 2017 10:21PM ET
As per the Bank of America (NYSE:BAC) Merrill Lynch’s world fund manager’s survey for May, the "long Nasdaq" is the most popular trade, replacing the long U.S. dollar trade that had dominated the market for the last five months. The tech-laden Nasdaq continues to touch record highs this year, on potential tax reforms and impressive first-quarter earnings.
While investors are piling into tech stocks, the U.S. dollar took a beating after President Trump shared classified information with Russia. Trump, looking forward to push dollar down to aid exporters, also saw fund managers slashing longs of the greenback. On the contrary, they doubled their long position in the tech stocks.
Banking on these bullish sentiments, investing in sound tech stocks listed on the Nasdaq will be prudent.
Nasdaq Hits Record High, Tech Gains
The Nasdaq Composite Index scaled a record high for the second time in a row this Tuesday. The tech-heavy benchmark surged 33% to close at 6,169.87, slightly lower than the intraday high of 6,170.16. It has gained 14.24% so far this year, after nabbing its 32nd record close on May 15. Nasdaq’s year-to-date gain comfortably surpassed the 6.2% gain for Dow Jones and 7.3% rise for the S&P 500.
The bulk of Nasdaq’s rise in 2017 is backed by the five tech-behemoths – Apple Inc. (NASDAQ:AAPL) , Netflix, Inc. (NASDAQ:NFLX) , Alphabet Inc. (NASDAQ:GOOGL) , Facebook, Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN) . These companies have gained considerably since their initial public offering 20 years back.
Investors’ optimism over Nasdaq’s gain is increasing, thus making it the most crowded trading hub right now. Gains among tech stocks are boosting the benchmark index. Trump’s intentions to lower the U.S. tax code will help tech stocks return cash held overseas to the U.S. Tech stocks have stashed around $2.4 trillion in overseas market. Such cash could be used to spur capital investment and create more jobs in the country. Further, it might be used for share buybacks, paying dividends and pay down debts.
Also, impressive performance of the technology stocks in the first-quarter 2017 earnings season is currently supporting Nasdaq’s upward trajectory. Our latest Zacks Investment Research
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