Making Money Alert: The Tech Tempest in the Teapot

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

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Over the past couple of trading days, there have been a lot of fireworks in the equity markets. There also have been a lot of fireworks on the political front, as last night’s presidential debate was replete with head-to-head, and extremely aggressive, action by both combatants. We now are less than three weeks away from choosing the next leader of the free world. At this point, the polls suggest a race that’s far too close to call.

As for stocks, the first two days of the week clearly saw traders going bullish, as stocks surged nearly across the board. The one sector that hasn’t participated strongly in the recent equity jump is technology. This is troubling, as tech usually leads the way higher during a sustainable bull market.

The reason for the downbeat action in techs was due to some disappointing earnings from bellwethers IBM (IBM) and Intel (INTC). Both companies issued profit and revenue numbers that fell short of estimates and, as such, both large-cap techs got punished by traders.

The high-profile weakness in the space has put pressure on the PowerShares QQQ Trust (QQQ), the measure of the largest stocks in the tech space. The chart here shows the so-called Qs now trading below their 50-day moving average.

By comparison, a chart of the SPDR S&P 500 (SPY) shows that the broader measure of the domestic equity market is trading at a new high, and well above its 50-day moving average.

Could this be the beginning of some divergence in this market that leads to an erosion of confidence in stocks at large? Is this a tech tempest in the equity teapot? I think the answer rests with future earnings reports.

If we see more earnings disappointments such as IBM and Intel, it could be a long fourth quarter for tech investors. If, however, we begin to get a more upbeat read from the many tech stocks that have yet to report, the Qs could begin to look more like SPY.

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Get Your Red-Hot, Q3 ETF Report Here

The third quarter was dominated by Fed-fueled buying, and that led to a nice increase in the major averages. But in addition to the broad-market buying, we saw a lot of action take place in the world of ETFs during Q3.

To keep you up to speed on all of the action in the world of ETFs during the previous three months, we have just published the latest edition of the Fabian ETF Report.

This quarter’s list presents details on more than 1,200 ETFs holding more than $1 trillion in assets.

So far this year, there have been 117 new ETFs introduced into the market, including the biggest of them all, the PIMCO Total Return ETF (BOND). This fund continues to be the biggest success story in the ETF space in 2012. In just six months, BOND has captured more than $3 billion in assets.

Other notable funds in the report include the Morningstar Multi-Asset Income Fund (IYLD), which is the first multi-strategy, “fund of funds” income product. There’s also the SPDR Barclays Short Term High Yield (SJNK), a new way to play the short-term bond market. Finally, there’s the MarketVectors Unconventional Oil and Gas (FRAK), the first ETF of its kind in the unconventional oil and gas extraction space.

Click here to get your quarterly rundown on every ETF in the market today.

My Top 10 High-Yield Funds

For the past several weeks, I’ve been providing you with various lists of ETFs that I consider to be some of the top picks in their respective genres and sectors. This week, I have another list for you, and it is my Top 10 High-Yield Funds.

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In today’s investing world, high yield is all the rage. That’s because cash and cash equivalents pay nearly nothing, thanks in large part to the Federal Reserve’s policy of keeping interest rates at near zero, and the central bank’s QE3 policy, which intentionally keeps yields down.

The list here contains anything but low yields, as the yield column here clearly suggests.

If you’re looking to put high-yield funds in your portfolio, then start with this list. It should provide you with more than enough ideas to get your own high-yield watch list up and running.

The Wit of Wolfe

“If a conservative is a liberal who’s been mugged, a liberal is a conservative who’s been arrested.”

–Tom Wolfe

The brilliant writer has a knack for putting things into humorous perspective, and he does so here with this quip regarding the nature of conservatives and liberals. Given the tense election race, I thought you might appreciate a little political humor to lighten up the mood.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Doug.

To the best within us,

Doug Fabian

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