Friday’s ETF To Watch: QQQ In Focus As Apple Launches iPad

by on March 16, 2012 | ETFs Mentioned:

U.S. equities have been on a tear in 2012, as welcomed bullish momentum has returned to markets. The Dow recently crossed 13,000 marking a post-crisis high, while the S&P 500 looks to settle above 1,400. Strong data has been at the forefront of gains, as a relatively strong earnings season coupled with a number of healthy economic indicators have come in at encouraging levels. One stock, however, has been outperforming nearly all of its colleagues, as investors seem to have an insatiable appetite for Apple (AAPL), which has recently become the most valuable company in the world by market capitalization [see also How An Apple (AAPL) Dividend Would Impact ETFs].

AAPL is up 43.4%% on the year, as the stock gained massive momentum after first quarter earnings that blew away Wall Street’s wildest expectations. Since then, there has been no stopping the company, as a cash pile of nearly $100 billion prompted rumors of a dividend payout, a first for the company. Though an income stream or one time payment has yet to be offered to investors, AAPL has been in the limelight recently due to the buzz being created about its newest tablet device. Today will see the release of the new iPad, which has already sold out in a number of locations and is expected to make a huge buzz in the tech world [see also 12 High-Yielding Commodities For 2012].

The new device will have a clearer picture than the HD TV in your living room, with over 3.1 million pixels in its “Retina Display”. The new tablet also aims to be much faster, as “Apple is rolling out two models of the iPad that operate on the next-generation 4G LTE wireless networks — one for AT&T and one for Verizon” writes Clayton Morris. In short, the new device promises to be better in every way and will debut in 12 countries today, and 25 more next week. Prior to its release, the buzz around AAPL has been immense, as the stock crossed the $600 level during yesterday’s trading.

In light of this release from the world’s largest (and arguably most popular) company, today’s ETF to watch will be the QQQ ETF (QQQ). This fund, which tracks the 100 largest securities on the Nasdaq, holds Apple as its top security, making up more than 15% of the ETF. This gives AAPL a fair amount of say in the daily performance of this cap-weighted product. If today’s launch goes smoothly, AAPL has the potential to push QQQ higher, but tech launches can be somewhat volatile, as a bug or issue with the new device could sink the stock and this ETF alike [see also What Will A Facebook IPO Mean For ETFs?].

Disclosure: Jared is long VZ.