A Huge Chunk of This ETF’s Weight is Close to New Highs

With all the talk about the Nasdaq’s rise and chatter increasing that the Nasdaq Composite and the PowerShares QQQ (QQQ) could return to record highs, it would stand to reason that at least a few Internet stocks have been enjoying decent runs of late.

That would be an accurate assessment as the PowerShares NASDAQ Internet Portfolio (PNQI) gained 1% Thursday on volume that was 10% above the daily average to touch a new all-time high. PNQI has fought throw what is usually a seasonally weak period for Internet stocks to post an almost 8.2% year-to-date gain. [Another View on Internet ETFs]

In just the past month, PNQI is up nearly 12% and has brought in $45.2 million of its $388.4 million in assets under management, according to PowerShares data.

Looking at how close several of PNQI’s top-10 holdings are to new highs and combining that with the fact that March and April are often kind to U.S. stocks, PNQI is well-positioned to keep climbing. [Spring Upside for Equity ETFs]

Here is a look at PNQI’s top-10 holdings as of Feb. 26.

Data Courtesy: PowerShares

The only member of PNQI’s top-10 lineup to close at a new 52-week high Thursday was eBay (EBAY). On average, however, the other nine stocks are just 3.7% away from new 52-week or all-time highs. That number is skewed higher by Amazon (AMZN) being almost 12% below its 52-week high.

On the other hand, Google (GOOG), Priceline (PCLN), Netflix (NFLX) and Akamai (AKAM), a combined 23.4% of PNQI’s weight, all closed less than 1.3% below their 52-week highs. Given those short distances to new highs to cover, a significant percentage of PNQI’s weight and the ETF itself could be making new highs as soon as today.

While history shows sentiment can rapidly change on Internet stocks, the current environment has been favorable for PNQI and its constituents. QQQ’s top-10 holdings include just three stocks found in PNQI’s top-10 – Google, Amazon and Facebook (FB) – and those stocks combine for just 15.4% of QQQ’s weight. PNQI’s 2014 performance has been more than double that of QQQ.

PowerShares NASDAQ Internet Portfolio

Tom Lydon’s clients own shares of Amazon, Google, Facebook and QQQ.