NASDAQ 100 Rebalance May Be Premature (AAPL, MSFT, QQQ, GOOG, INTC, ORCL)

If you want to know what is hurting Apple Inc. (NASDAQ: AAPL) and helping Microsoft Corporation (NASDAQ: MSFT), it may be nothing more than continued chatter about an index rebalancing act by the NASDAQ 100 on its weightings.  The NASDAQ 100 is one of the key technology (and others) tracking indexes out there and the PowerShares QQQ (NASDAQ: QQQ) ETF is very active in tracking this index.  The QQQ ETF also has some $31 billion in assets per Yahoo! Finance.

There is the possibility of a NASDAQ 100 rebalancing coming again.  We covered this last rebalance in-depth last year, but the 24% weighting is the key trigger.  Apple recently had about 17% weighting in the index; the next four and Apple combined appear to be close to 42% of the index with the max threshold being a 48% trigger. 

It seems perhaps a bit premature to be banking on a NASDAQ 100 rebalance coming true, although anything is possible.

If a rebalance comes or if our math is wrong, then top components also include Google Inc, (NASDAQ: GOOG), Intel Corporation (NASDAQ: INTC) and Oracle Corporation (NASDAQ: ORCL).  If our latest math is correct, these five come to almost 42% weighting on last look rather than a 48% threshold.

The NASDAQ itself notes:  Index-eligible securities which are already in the Index and which are ranked in the top 100 eligible securities (based on market value) are retained in the Index. A security that is ranked 101 to 125 is also retained, provided that such security was ranked in the top 100 eligible securities as of the previous Ranking Review.

Further notes… The composition of the NASDAQ-100 Trust will be adjusted from time to time to conform to changes in the composition and/or weighting of the securities in the Index.  If deemed temporary, the NASDAQ 100 does not have to make changes.

Maybe Apple is just down because of the allegations out of China that Apple is infringing on a trademark name for the iPad.  Apple shares are down 1.3% at $491.05 and Microsoft shares are up 2% at $30.66.

JON C. OGG