Traders Push Volume for $65 Billion Tech ETF to Decade High

(Bloomberg) -- As technology stocks suffered their worst rout in seven years, a $65 billion fund dedicated to the sector saw its heaviest turnover in a decade.

About 114 million shares of the Invesco QQQ Trust Series 1 ETF worth $20 billion changed hands Wednesday as its underlying index went into free fall. That trading represents the most turnover in the fund known as QQQ since 2008 and almost 30 percent of its total assets.

“When a big liquid ETF like that sees that kind of volume it means investors are scared,” said Bloomberg Intelligence analyst Eric Balchunas. “It’s like an unofficial fear gauge.”

QQQ fell as much as 4.5 percent on Wednesday, with the large-cap technology behemoths Amazon.com Inc. and Apple Inc. contributing the most to the decline. The ETF fluctuated between gains and losses on Thursday as traders tried to suss out what’s next for the sector.

Some money managers say the stock sell-off Wednesday was just a hiccup. Technology shares continue to offer the best fundamentals of any sector, and the current weakness is “just an interruption in a continued uptrend,” Ed Campbell, a managing director and senior portfolio manager at Quantitative Management Associates, wrote in a note to clients.

And if history is any indicator, a recovery may be near, Mark Lehmann, the president of JMP Securities, said on Bloomberg TV. The market has seen two corrections like this already this year, and both times a turnaround “took us to new highs,” he said.

“We were due for a pause,” Lehmann said. “We’re getting a little bit of that correction, but I’m not sure tech is dead.”

--With assistance from Tom Lagerman.

To contact the reporters on this story: Carolina Wilson in New York City at cwilson166@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Brendan Walsh, Randall Jensen

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