If you follow the Nasdaq like I do, you too have to be disappointed with the performance of the NDX (Nasdaq 100). It has underperformed nearly all the major indices since the beginning of the year, except for the SOX (Semiconductors). I just took a look at the ETF’s: DIA (DOW), SPY (SPX) and QQQQ (NDX), and it becomes clear why the NDX has performed as it has.
The top 10 holdings in the NDX represent 33% of the index: msft, aapl, qcom, goog, intc, ebay, amgn, csco, sbux and gild. With such a heavy weighting in many oversized and dormant stocks like msft, intc, csco; and stocks past their peak like aapl, ebay, amgn; the NDX is in desperate need of new leadership. Google, Qualcom and Gilead need to lead this index higher.
The top ten holdings in the SPX represent just 20% of the index, and the only duplicate of the NDX is msft. As for the DOW, its top ten holdings represent 50% of the index and msft is not one of them. We should be looking for new leadership in the NDX in the weeks and months ahead, and the current prospects are goog, qcom, gild and sbux. GOLD, btw, is getting fairly close to an intermediate term top.