The Nasdaq-100 PowerShares QQQ (NasdaqGM: QQQ) is making up ground against the overall market thanks to recent strength in the technology sector and Apple (NasdaqGS: 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 (NYSEArca: 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 (NYSEArca: 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.

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