NASDAQ Rebalance

  • Posted: 03 April 2012 01:57 AM

    Hate to bring up a negative topic, but is the QQQ going to announce a rebalance in the next week or so? It looks like they made a rebalance announcement on April 7, 2011. Comments? I have a ton of May, April, and July calls.

    [ Edited: 16 April 2012 09:03 PM by lovemyipad ]      
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    Posted: 14 March 2012 10:43 AM #1

    mstefa - 14 March 2012 12:51 PM
    Phoebear611 - 14 March 2012 12:50 PM

    Here’s a link to a Reuters article that explains the re-balancing:

    http://www.reuters.com/article/2012/03/09/us-apple-nasdaq-idUSBRE8280EV20120309

    and another from wiki. for both nasdaq 100 and composite
    http://en.wikipedia.org/wiki/NASDAQ-100#Yearly_rebalancing_and_re-ranking

    AAPLs would need to approach 750 to reach 24% (currently at 17.2%) of the index from a stand alone standpoint.  They do add the values of several companies and if they reach 48% (currently at 42%) combined they will rebalance.  This article is very similar to the one already posted, but here you go…

    http://www.chicagotribune.com/business/sns-rt-us-apple-nasdaq100bre8280ev-20120309,0,2823694.story

         
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    Posted: 03 April 2012 02:04 AM #2

    Well, we wouldn’t know until the NASDAQ announces something.

    An AFBer here is pretty familiar with the conditions for a “normal” rebalancing (when a stock overweights the index) and we’re not there yet as I recall.  I think AAPL would have to get into the 700s all else being equal.  Special rebalancings are “special”, so who knows on that point.

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    Posted: 03 April 2012 09:06 AM #3

    I just moved to this thread an earlier post from Max on this subject.  Take a peek above ^^^

         
  • Posted: 16 April 2012 05:23 PM #4

    mstefa - 16 April 2012 06:57 PM

    Some speculate Texas Instruments’ addition to the NASDAQ 100 (QQQ) is playing a role, as index funds will need to sell some Apple to rebalance

    I don’t recall this was discussed here today?

    I’m also wondering if this had an effect on today’s selling? NASDAQ announced, this weekend, that TI was moving from the NYSE to NASDAQ on 4/23 and being added to NASDAQ 100. It would seem that would require a rebalancing of QQQQ, among others.
    Could this account for this morning’s sale?

         
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    Posted: 16 April 2012 05:25 PM #5

    joel90069 - 16 April 2012 08:23 PM
    mstefa - 16 April 2012 06:57 PM

    Some speculate Texas Instruments’ addition to the NASDAQ 100 (QQQ) is playing a role, as index funds will need to sell some Apple to rebalance

    I don’t recall this was discussed here today?

    I’m also wondering if this had an effect on today’s selling? NASDAQ announced, this weekend, that TI was moving from the NYSE to NASDAQ on 4/23 and being added to NASDAQ 100. It would seem that would require a rebalancing of QQQQ, among others.
    Could this account for this morning’s sale?

    Not sure, but it wasn’t just us.  All of high beta in the sh*tter today.

         
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    Posted: 16 April 2012 05:25 PM #6

    joel90069 - 16 April 2012 08:23 PM
    mstefa - 16 April 2012 06:57 PM

    Some speculate Texas Instruments’ addition to the NASDAQ 100 (QQQ) is playing a role, as index funds will need to sell some Apple to rebalance

    I don’t recall this was discussed here today?

    I’m also wondering if this had an effect on today’s selling? NASDAQ announced, this weekend, that TI was moving from the NYSE to NASDAQ on 4/23 and being added to NASDAQ 100. It would seem that would require a rebalancing of QQQQ, among others.
    Could this account for this morning’s sale?

    It accounts for one of many “convenient excuses.”

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    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 16 April 2012 08:41 PM #7

    Has anyone done an analysis or has details on the specifics (like what new percentage weight) of the rebalancing effect in the NASDAQ given how many index ETFs effective?  I assume that the ETFs are indexes they won’t actually rebalance until the the NASDAQ rebalances (as opposed to preparing for it or doing it in advance).  Thoughts?

         
  • Posted: 26 April 2012 02:18 PM #8

    David Nelson - 26 April 2012 04:48 PM
    agileandswift - 26 April 2012 04:39 PM

    http://www.livetradingnews.com/trading-outlook-apple-inc-aapl-71957.htm#.T5l5nKtWp5E

    Any takes on this article?

    It seems like reactionary speculation to me… but then I’m an eternal optimist when it comes to Apple so maybe it’s a possibility. I also am curious to hear what others have to say.

    The artcle is right to a certain extent. There will be rebalanacing (assuming AAPL is around 670-675), and usually executed end of quarter (June 30th). This would mean 2 weeks prior to June 30th date it would be “officially” announced. The 2nd week in June Nasdaq would “unofficially” advise the hedgies, and serious distribution would begin. It’s on my calendar as a reminder

    [ Edited: 26 April 2012 02:25 PM by thealct ]      
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    Posted: 26 April 2012 04:40 PM #9

    agileandswift - 26 April 2012 04:39 PM

    http://www.livetradingnews.com/trading-outlook-apple-inc-aapl-71957.htm#.T5l5nKtWp5E

    Any takes on this article?

    This article makes little sense. It’s either FUD or ignorance. It promotes the false idea that AAPL will fall because of selling related to cutting the weight of AAPL in the S&P 500 and NASDAQ indexes, which it incorrectly claims is coming. But that’s impossible because both of those indexes are market cap weighted with no special provisions for cutting the weight of a large constituent. The NASDAQ 100, however, has special rules, but it only gets a brief mention in the article.

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  • Posted: 30 August 2012 08:27 AM #10

    With AAPL at these levels, I am starting to see questions surface about it’s percentage of the NASDAQ.  Someone refresh my memory, does this get pre-announced or how does it work again?  Maybe someone has a link from previous discussions we have had on the topic on this thread.

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    Posted: 30 August 2012 09:38 AM #11

    Phoebear611 - 30 August 2012 11:27 AM

    With AAPL at these levels, I am starting to see questions surface about it’s percentage of the NASDAQ.  Someone refresh my memory, does this get pre-announced or how does it work again?  Maybe someone has a link from previous discussions we have had on the topic on this thread.

    It gets announced ahead of time. Last year it was announced in early April and the rebalancing took place in late April.

    The methodology for rebalancing the NASDAQ 100 (*not* the NASDAQ) is spelled out here:

    https://indexes.nasdaqomx.com/docs/methodology_NDX.pdf

    AAPL has to exceed 24% of the NASDAQ 100 to trigger an automatic rebalancing. It’s currently only at 19.91% (cf. http://www.invescopowershares.com/products/overview.aspx?ticker=QQQ). But the last rebalancing was a “special” rebalancing, not an automatic one, which can be done at any time, somewhat arbitrarily.

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    Posted: 30 August 2012 12:16 PM #12

    Apple II+ - 30 August 2012 12:38 PM
    Phoebear611 - 30 August 2012 11:27 AM

    With AAPL at these levels, I am starting to see questions surface about it’s percentage of the NASDAQ.  Someone refresh my memory, does this get pre-announced or how does it work again?  Maybe someone has a link from previous discussions we have had on the topic on this thread.

    It gets announced ahead of time. Last year it was announced in early April and the rebalancing took place in late April.

    The methodology for rebalancing the NASDAQ 100 (*not* the NASDAQ) is spelled out here:

    https://indexes.nasdaqomx.com/docs/methodology_NDX.pdf

    AAPL has to exceed 24% of the NASDAQ 100 to trigger an automatic rebalancing. It’s currently only at 19.91% (cf. http://www.invescopowershares.com/products/overview.aspx?ticker=QQQ). But the last rebalancing was a “special” rebalancing, not an automatic one, which can be done at any time, somewhat arbitrarily.

    last time IIRC AAPL inexplicably sold off hard during the late friday afternoon before it was announced that monday.  and it gapped down $10 on monday morning.  so the retail investor didn’t get much of a warning.  of course, it proceeded to keep selling off much further.