The Nasdaq-100 PowerShares QQQ (NasdaqGM: QQQ) and Technology Select Sector SPDR (NYSEArca: XLK) saw outflows of $1.1 billion and $600 million last week, respectively.
Apple’s (NasdaqGS: AAPL) hefty weight in Tech related Indices/ETFs squarely put the name in focus as it rises and falls, as it truly has the ability to influence shorter, and longer term moves of at least the entire tech sector given this weighting.
AAPL is the top weighting in the NDX/QQQ at 19.74%, and has an even heavier weighting in XLK at 20.48%. On Friday, AAPL eked out a small gain (closed at $629.71) after trading as low as a $623 handle earlier in the week.
To put this is perspective, AAPL traded as high as $705.07 about 1 month ago heading into September’s option expiration (note, there was massive short interest in AAPL via 700 strike calls) and selling pressure/profit taking above the $700 level.
The path of the stock has been difficult ever since, with the stock plunging below its 50 day SMA last week for the first time since July. This said, we believe that profit taking (for those who have longer term or 2012 profits in the name) has begun as it seems that stop loss orders are taking holders out of the stock as it falls lower.
This said, more evenly balanced Technology ETFs are likely worth a look given individual tax considerations going into year’s end such as QQEW (First Trust Nasdaq 100 Equal Weight) and QQQE (Direxion Nasdaq 100 Equal Weight) as potential “tax swaps.” [Equal-Weight Tech ETFs]
Also of note, and likely related to AAPL’s recent swoon, SPY had a tough week in terms of outflows, and AAPL is the number one weighting in the S&P 500 currently as well at 4.83% and the S&P 100 (see the large OEF outflows in the above section) with a 7.45% weighting.
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Full disclosure: Tom Lydon’s clients own AAPL and QQQ.