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Nasdaq-100 ETF Leading Market as Apple Clears $500


The Nasdaq-100 PowerShares QQQ (QQQ) is making up ground against the overall market thanks to recent strength in the technology sector and Apple (AAPL) climbing back over $500 a share.

Apple is the largest holding in QQQ at 13% of the portfolio. The stock is also the biggest holding in SPDR S&P 500 (SPY) but represents much less of the fund at about 3%.

Apple shares have vaulted more than $100 after briefly dipping below $400 in late June. The stock is in a three-day rally on heavy volume with Carl Icahn this week revealing a large stake in Apple. The hedge fund manager said the stock is undervalued and that CEO Tim Cook should initiate a larger buyback.

QQQ is comprised of the 100 largest nonfinancial stocks listed on the Nasdaq. The ETF had been trailing the S&P 500 for 2013 but is pulling even due to recent strength in tech, and Apple in particular.

Still, tech remains one of the worst-performing U.S. sectors this year.

Yet Greg Harmon at Dragonfly Capital notes that market leadership may shifting from the small-cap iShares Russell 2000 ETF (IWM), which has been leading the market higher since the November 2012 bottom, to the Nasdaq-100.

“Some are worried of an impending pullback in the rally as they focus on the floundering Russell. But others are noticing that this just might be a rotation from the Russell to a new leader. And that new leader looks to be the Nasdaq,” Harmon wrote. “Quietly it printed a new 13 year closing high on Tuesday as the other index ETFs continued to consolidate.” [Nasdaq ETF Highest Since 2000 After Streak]

The first chart below shows the relative performance of the Nasdaq-100 ETF versus the S&P 500 with the recent leadership of QQQ. The second chart shows how the major U.S. sector ETFs stack up against the S&P 500 this year.

Full disclosure: Tom Lydon’s clients own QQQ, SPY and AAPL.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.