BY MURRAY COLEMAN, Investor's Business Daily

The Nasdaq 100 has been edging up in the past 10 months. But some managers think the key stocks in the index are past their prime. Since bottoming at 34.35 in late April, the exchange traded fund Nasdaq 100 Trust Shares (QQQQ) has moved above 41. Intel's (INTC) poor showing, though, has weighed on the ETF. In the past week, QQQQ has bounced around its 50-day moving average.

"Since it's cap weighted, this fund's heavily skewed to tech's biggest names," said Bruce Zaro, chief technical strategist at Delta Global Advisors. "Those haven't been the best performers. Smaller caps have done better."

Nearly 40% of the ETF's assets are tied to its top 10 stocks. Many of those are laggards. Its top holding is Microsoft. (MSFT) Intel and Dell (DELL) are also major names.

Old-Line Techs

Jerry Slusiewicz, president of Pacific Financial Planners in Newport Beach, Calif., considers QQQQ as an old-line tech fund. "It's not weighted to the most innovative growth companies," he said. "Only eight out of the top 50 are biotech names. So this is an ETF that favors behemoths who've already seen their biggest gains."

And with a turnover rate in the single digits, investors are probably going to be locked into many of those poor performers for quite some time. The fund owns 100 stocks.

As a result, some managers are taking a more focused approach to tech. Zaro and Slusiewicz are investing in iShares Nasdaq Biotechnology. (IBB) It's mid-cap focused with a large slug of small-caps.

"It broke out in late February at 83 from an October bottom of 72," said Zaro. "It has some room to run from a technical perspective. My bullish price target is 99."

High Relative Strength

Nasdaq Biotech has around 160 names. Its Relative Price Strength Rating of 70 is higher than the broader Nasdaq tracking fund, which is at 49.

It's also attracting more attention among institutional investors. The biotech fund has an Accumulation/Distribution Rating of B, while QQQQ is at B-. Top names in the biotech ETF include Gilead Sciences, Teva Pharmaceutical  and Biogen Idec. 

Zaro also holds a chips sector ETF, iShares Goldman Sachs Semiconductor. He's waiting for it to set a 52-week high at 69.

"That would seem to confirm an investible breakout point," he said. "It would make us more confident that an 85 price objective would be attainable."

Some 35 mutual funds own QQQQ and they trade an average of 84 million shares a day. It's one of the most popular ETFs on the market today.

"The problem with smaller-sector ETFs is that they don't have as much institutional support," said Slusiewicz. "That makes them more vulnerable to big market swings."