Apple Drags on Nasdaq-100 ETF as Facebook Prepares to Join Tech Index

December 5th at 2:07pm by John Spence

The Nasdaq-100 PowerShares QQQ (NasdaqGM: QQQ) was firmly in the red Wednesday despite the Dow rallying more than 100 points. The divergence in these major stock benchmarks illustrates the sway that market giant Apple (NasdaqGS: AAPL) holds over tech indices.

Apple shares were down more than 4% following news that some clearing firms are raising margin requirements for the stock. Shares of the iPhone maker are down more than 20% from the September high, pushing the stock into bear market territory.

On the chart, Apple shares are nearing a so-called death cross, a technical pattern in which the 50-day moving average crosses below the 200-day.

“It’s one of the best names out there, but those people who think it’s going to have a rocket ship ride to $1,000 may be mistaken because competition is coming in and with a market cap this large, the expectation is quite high for the name,” said Colin Gillis, senior technology analyst at BGC Financial, in a CNBC report.

QQQ, the Nasdaq-100 ETF, was off nearly 1% in afternoon trading Wednesday. Apple is the largest stock in the portfolio at 18% of the fund.

Next week, Facebook (NasdaqGS: FB) will join the tech-heavy ETF’s tracking index. The social network will be added to the Nasdaq-100 at the start of trading next Wednesday, WSJ.com reports.

Facebook shares have rebounded somewhat since mid-November following the disastrous IPO.

“Before Facebook’s initial public offering, Nasdaq changed its ‘seasoning’ period for new firms to enter the Nasdaq-100 to three months, down from as little as a year,” WSJ.com reports. “The decision was a major factor in Facebook’s decision to list on the Nasdaq, a person familiar with the matter said at the time.”

PowerShares QQQ

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

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.

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