Nasdaq 100 Equal Weight Index Paints a Different Picture
- Posted by JC Parets
- on December 18th, 2012
You might think that the Nasdaq has been lagging some of the other major US equity averages lately. And after a quick glance at the Nasdaq100 ($QQQ), it’s a fair point. But remember that this disaster of an Apple stock is close to 20% of that index. Apple lost almost 30% of its value in just 3 months. I guess the 100B in cash and “low” p/e ratio wasn’t so important after all.
Now, looking at the Nasdaq100 in a different way, it actually turns out that they’ve been the leader. While the Dow Jones Industrial Average, S&P500, Russell2000, and Midcap400 are still below their September highs, the Nasdaq100 Equal Weight ETF ($QQEW) is already challenging those highs.
So basically, if you take $AAPL’s monster weighting out of the equation, the Nasdaq100 looks great:
Look at the lower window in the chart. How about that outperformance in the Equal Weight Nasdaq100 since the $AAPL destruction began?
We can have a long philosophical discussion about price and cap weighted averages. I have my feelings on that, like $IBM being the most important stock in the Dow Jones Industrial Average while Alcoa is almost irrelevant. But that’s a topic for another blog post.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) in 2008 and now actively manages money incorporating Technical Analysis and Behavioral Finance into his practice More
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