Why Tech Run May Continue (And How to Play It)

This post is part of a regular series written by ETF Trends editor Tom Lydon, special for CNBC.com.

The Nasdaq is on pace for the biggest two-month gain since 2002. This technology laden index is also the only major index in positive territory year-to-date and was hugely responsible for leading the end 2000-2002 bear market.

Why is tech suddenly so exciting?

Cheap Valuations. Right now, many consider tech stocks to be relative bargains.

Pres. Barack Obama. The president has said he wants to be the “Technology President.” He is pushing for better and more affordable broadband access for all Americans; he wants to use technology to improve our schools, libraries and health care systems. He has already put his money where his mouth is: his stimulus package allocated $7.2 billion in broadband grants.

Cash-Rich. The tech industry has plenty of well-established leftovers from the dot-com boom, and many of them are handing out dividends. Oracle declared its first quarterly dividend at the end of March.

Mergers and Acquisitions. Oracle recently announced that it has agreed to plunk down $7.4 billion to acquire Sun Microsystems . Oracle has long been gobbling up companies, including PeopleSoft, Siebel and BEA Systems.

Strong Earnings. Apple , AT&T , Google and IBM all surpassed earnings expectations for the first quarter; Microsoft met expectations — in a tough economy.

Instead of trying to figure out who’s going to be top, consider an exchange traded fund (ETF) to get access to all of these stocks and more.

The SPDR S&P Technology ETF holds 83 technology companies, including the ones mentioned above. The fund is up 11 percent year-to-date and, as of this writing, is within touching distance of climbing above its 200-day moving average.



Tom Lydon is the editor of ETF Trends and author of iMoney: Profitable ETF Strategies for Every Investor.