Big technology stocks have been a major driver for the US stock market returns over the past some years. And these stocks have also been a major source of asset gathering by mega asset managers, both in ETFs as well as for general investment funds.
This also includes many major hedge funds that are active in trading the market. Hedge funds attract and keep assets under management (AUM) both by providing great service to investors as well as prospects for either reasonable or above-market returns over time.
Now, the stock market both in the general indexes as well as in big technology stocks has not been generating basic underlying compelling returns so far for this year, especially for big tech stocks that are highly represented by the Nasdaq 100 Index (NQ).
But there is the potential setting up in the NQ contract that could present hedge fund managers with a mega opportunity to deliver outsized stock market returns for their clients.
And while it is fraught with near-term risk, the risk and return comparison is now shaping up in favor of the return side over the next three to four years.
Today, I want to share with you my analysis showing this long-term opportunity for the NQ futures contract.
Setting Up for a Potential Long-Term Move
Here’s the monthly NQ chart and the set up discussion…
The key to note is the outsized potential gain opportunity that may be working its way through the market for the NQ contract.
And at the same time, there is also the large-scale near-term risk of a further selloff.
But for hedges, this upside that outpaces the downside of the index is how potentially bigger and outsized returns can be made.
The Bottom Line
The stock market is not setting up too many easy and obvious bullish long buy trades right now in the near term, but bigger, longer-term setups may well be in the works.
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Keep on trading,
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