Rebalancing Nasdaq 100 To Limit Tech Influence Coming Soon! 😮‍💨

18% gain from taking QQQ calls on Monday. ⚠️ Trading tips: looking at calls above 367.1 and puts below 365.48 on Tuesday. Attention to upcoming CPIdata on Wednesday at 8:30am.

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The Nasdaq 100 Index, as tracked by the Invesco QQQ Trust (NASDAQ:QQQ), is set to undergo a significant rebalancing July 24. It’s a move intended to curb the dominance of a handful of large corporations, including Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META), NVIDIA Corp. (NASDAQ:NVDA) and Tesla, Inc. (NASDAQ:TSLA).

This remarkable rebalancing act, Yahoo Finance reports, is a rare occurrence, and may lead to significant price shifts in the tech-heavy index.

A reshuffle is approaching

The Magnificent 7

The “Magnificent Seven” a term that is often used to reflect the dominance of seven leading tech companies on the Nasdaq 100 Index. These companies have had an extraordinary influence on the performance of the index, leading to the decision to introduce the special rebalance.

As of July 10, more than half of the Invesco QQQ ETF was represented by these seven stocks.

Company Weight (%) in QQQ ETF

- Microsoft Corp. 12.91

- Apple Inc. 12.47

- Alphabet Inc. 7.39

- NVIDIA Corp. 7.04

- Amazon Inc. 6.88

- Tesla Inc. 4.50

- Meta Platforms Inc. 4.31

- Magnificent Seven 55.50 (Total weightage)

ETFs And The Rebalance

Exchange-traded funds (ETFs), particularly those that follow the Nasdaq 100 Index like the Invesco QQQ ETF and the ProShares UltraPro QQQ ETF (NASDAQ:TQQQ), are also preparing for the extraordinary rebalance. Investors in these ETFs may experience changes in their portfolios as a result.

Looking Forward

As the Nasdaq 100 Index embarks on this new path, it remains to be seen how the reshuffle will impact the broader financial market and the existing dominance of the magnificent seven. While the motive is to ensure a more balanced representation of companies, the true impact will only be known with time.

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