Tech ETF (NASDAQ:QQQQ): Hedging Tools Part of Every Portfolio

Looking at some historical pricing thru a widely used indicator reveals some market logic as we watch markets make new highs in Q4 2010. First, in October 2007 this ETF was trading around 54.00 and declined 46% to lows in March 2009, since this low was established this ETF ( and the overall market ) regained all of this 46%., 19% in the last 60 days.

As a market watcher this tells us many things 1.) Longtime Holders of stocks for retirement exited the market in Q1 2009 and 2.) The lack of these sellers has added to the recent 18% rise as investors chase performance and 3.) The public is nearly always wrong when they enter and exit.

Further, the markets and specifically these ETF's are tools for Portfolio Managers as a way to track performance as a hedge in case they r wrong about the other stock picks they make. The best analogy for these ETF's are that they represent the outer band of supply and demand, absolutely no PM sat thru the 46% decline and recovery and a very small % of managers caught the last 60 day 18% move in Technology using the QQQQ.

The positives are that they are very liquid and can be great tools for retail investors who want to participate in the market without using a broker.