First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: QQEW)

First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ:QQEW), Quote.Headers.trade-ideas

First Trust NASDAQ-100 Equal Weighted Index Fund

Technology

Healthcare

Consumer Cyclical

Industrials

Communication Services

Consumer Defensive

Utilities

Energy

Financial Services

Real Estate

Other

The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks and depositary receipts that comprise the index. The index is the equal-weighted version of the NASDAQ-100 Index which includes 100 of the largest U.S. and international non-financial companies listed on Nasdaq based on market capitalization.

Charter Communications Inc Cl A

American Electric Power Co. Inc.

Old Dominion Freight Line Inc.

Mercadolibre Inc - Common

Warner Bros Discovery Inc

Illumina, Inc.

Tesla Inc.

Exelon Corporation Snr S* Ice

Xcel Energy Inc Common Stock Usd 2.5

Doordash Inc

Markets

Tech

ETFs

NVDA

QQEW

The Markets

To say NVDA (NASDAQ: NVDA) crushed earnings is a drastic understatement. You won’t find fundamental analysis on this page. But it does make sense to pay attention to the smart and experienced traders that know the fundamentals. And the opinion seems to be pretty consistent.

Bulls Charge Into The Memorial Day Weekend On AI Excitement And Nvidia Earnings Momentum

AAPL

Fidelity NASDAQmposite Index Fund ETF-Tracking NASDAQmposite Index

ONEQ

TBRA

ETFs in Focus on the Nasdaq Rally

AMZN

GOOGL

MSFT

Nasdaq Outperforms: 3 ETFs in Focus

<h3>The Markets</h3>
To say NVDA&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) crushed earnings is a drastic understatement. You won&rsquo;t find fundamental analysis on this page. But it does make sense to pay attention to the smart and experienced traders that know the fundamentals. And the opinion seems to be pretty consistent.
--We&rsquo;ve rarely seen a company of this size come out with such a substantial earnings beat and upward guidance revision.
--This is evidence that the artificial intelligence (AI) revolution is real, it&rsquo;s here, and it will have a bigger impact on the world and the stock market than the internet did.
Nvidia&rsquo;s stock rose as much as 30% on the news, adding $200 Billion to the company&rsquo;s market capitalization. This is after already rising nearly 200% since the low of October 2022.
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With a new high in place and no price history at these levels, we can look at a Fibonacci extension for clues on what may be in store up above. The 1.618% level shows a price of $448.15.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffcea5008-ed1b-4daa-8fe5-d4f2ce750771_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffcea5008-ed1b-4daa-8fe5-d4f2ce750771_2162x1202.png" style="height:347px; width:624px" /></a>
Obviously a nice move for that stock. However, as mentioned in <a href="https://www.trading-adventures.com/p/here-we-go-orhere-we-go-again" rel="noopener noreferrer nofollow" target="_blank">Wednesday&rsquo;s Midweek Market Update</a>, the broader implications for AI, semiconductors, technology, and the whole market are the bigger story.
Almost every other chip maker went up on NVDA&rsquo;s news. The whole industry stands to benefit from this growth cycle. And it will likely impact other areas and businesses in ways not yet imagined.
It will be fun to watch and to trade.
<h3>The Charts</h3>
SPY&nbsp;(ARCA: SPY)&nbsp;capped off the strong reversal by closing near the highs of the day. Although it didn&rsquo;t quite get past last Friday&rsquo;s high, it did close over $420. The short-term MAs are rising and there is plenty of room above on the RSI. Momentum should persist here, barring further debt ceiling debacle.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffc76df8f-2032-448c-92b5-72bbe8388840_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Ffc76df8f-2032-448c-92b5-72bbe8388840_2162x1202.png" style="height:347px; width:624px" /></a>
QQQ&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)&nbsp;continues to carry the torch and jumped nearly 6% from the low on Wednesday. The extension persists so we should expect at least a slight correction or some sideways consolidation.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F1f5b01ae-2bc1-4d84-838d-ac6260ba34e3_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F1f5b01ae-2bc1-4d84-838d-ac6260ba34e3_2162x1202.png" style="height:347px; width:624px" /></a>
IWM (ARCA: IWM) The small-caps still have a lot to prove. But they&rsquo;re not going down without a fight.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe9d356b2-36e4-44d1-830f-25a90b41f117_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe9d356b2-36e4-44d1-830f-25a90b41f117_2162x1202.png" style="height:347px; width:624px" /></a>
DIA (ARCA: DIA) Has a successful reversal from the 200-day MA. Now it needs to move past the 8/21/50-day MAs.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9e2aef92-1628-4efc-a516-83c34890785c_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9e2aef92-1628-4efc-a516-83c34890785c_2162x1202.png" style="height:347px; width:624px" /></a>
QQEW&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqew#NASDAQ">QQEW</a>) - Remember the &lsquo;bad breadth&rsquo; argument? The equal-weight Nasdaq 100 is close to breaking out.
<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa9c321a3-8898-4785-b315-a4f90ff4a0e3_2162x1202.png" target="_blank"><img alt="" src="https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa9c321a3-8898-4785-b315-a4f90ff4a0e3_2162x1202.png" style="height:347px; width:624px" /></a>
<h3>The Closing Bell</h3>
The checklist still isn&rsquo;t completed. But there is definitely a more bullish vibe going around now. And while Wednesday&rsquo;s dip helped work off some excess, many things are still very extended. Don&rsquo;t get complacent.
We need to see how this extension gets resolved.
--Does tech sell off sharply?
--Or does it move sideways?
While that&rsquo;s happening are other stocks (DIA, IWM issues) getting bought? That would be one of the most constructive outcomes.
Weekend Weekly charts will be a day late this time. I&rsquo;m taking off bright and early to head to the fishing camp.bukll
To all of you in the US, I hope you all have a fantastic Memorial Day holiday. To readers across the globe, remember that US markets are closed Monday.
So enjoy some rest and relaxation, all. We&rsquo;re back in action Tuesday morning.
<h3>The Disclosures</h3>
***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (&ldquo;T3TG&rdquo;) a SEC registered broker/dealer and member of FINRA/SIPC.&nbsp; All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG. &nbsp;&nbsp;
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed.&nbsp; This may reflect the financial or other circumstances of the individual or it may reflect some other consideration.&nbsp; Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions.&nbsp; Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.&nbsp; &nbsp;
POSITION DISCLOSURE
May 26, 2023, 4:00 PM
Long:&nbsp; GOOGL, META, NVDA, AMD0209P120
Short:&nbsp;&nbsp;
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike
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News

BRKS

DCRBU

DWLD

EBIZ

FORM

GLIBA

HERO

JSML

KBLMR

LBRDA

LBRDK

MAACU

MELI

MORN

POOL

SITE

SMMCW

STNE

Tekkorp Digital Acquisition Corp Units (1 Ord Share Class A & 1/2 War)

TEKKU

Stocks Trading Near 52-Week Highs On Friday, Nov. 6, 2020: SID, SE, TEKKU, PFXI, HERO, MORN, RMD, ROL, FSV, TMO, KBLMR, STNE, DWLD, BFT, JSML, BRKS, FORM, EBIZ, MAACU, QQEW, LBRDK, POOL, LBRDA, GLIBA, CHN, DCRBU, SMMCW, MELI, SITE

On Tuesday, approximately 30 exchange-traded funds hit all-time highs. Many of those were ETFs that have come to market this year, but there were seasoned veterans among the group as well, with one of the notables being the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), the NASDAQ-100 tracking ETF.
That&#39;s right. Partying like it&#39;s 1999, QQQ, one of the world&#39;s largest ETFs, is up a tidy 9 percent over the past month. Year-to-date, QQQ is higher by 11.4 percent, or more than quadruple the returns offered by the S&amp;P 500. Unfortunately, some investors are missing out on the resurgence of the Nasdaq, at least when it comes to QQQ.
<h3>A Closer Look AT QQQ</h3>
Proving that ETF flows data can sometimes be contrarian indicators, in a year where ETF inflows look poised to eclipse prior records and at a time when QQQ is soaring, the ETF has bled assets. To be precise, investors <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">have yanked $1.38 billion</a> from QQQ this year. That is more than has been pulled from any other PowerShares ETF. That claim to fame is saying something, because Illinois-based PowerShares is the fourth-largest U.S. ETF sponsor and has one of the deepest lineups in terms of number of funds.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5959483/paypal-finds-another-etf-home-will-join-qqq">PayPal Finds Another ETF Home; Will Join QQQ</a></bzrelatedlink>
Perhaps it can be argued that it is understandable that investors have pulled money from QQQ this year. There have been periods of lethargy in 2015 for shares of Apple Inc. (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>), QQQ&#39;s largest holding at a weight of nearly 13 percent. There was the biotech swoon, which hurt QQQ because the ETF allocates 14.6 percent of its weight to healthcare stocks and nearly all of those names hail from the <a href="http://www.benzinga.com/general/biotech/15/10/5947872/traders-get-adventurous-with-leveraged-biotech-etfs">biotech space.</a>
On the other hand, Apple is far from the only tech stock found in QQQ, and the ETF&#39;s second-largest sector weight is 20.1 percent to consumer discretionary, this year&#39;s top-performing sector. That means investors that have departed QQQ have missed out on some of the boffo performances turned in by the likes of Amazon.com, Inc. (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>), Priceline Group Inc (NASDAQ: <a class="ticker" href="/stock/pcln#NASDAQ">PCLN</a>) and Netflix, Inc. (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>).
<h3>A Look In On Other NASDAQ-100 Tracking ETFs</h3>
QQQ is not the only NASDAQ-100 tracking ETF that has lost money this year. The First Trust NASDAQ-100 EqualWeighted ETF(NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) is lighter by nearly $5.8 million. QQEW is up 6.3 percent over the past month and now resides less than 3 percent below its all-time high.
Interestingly, the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>), a rival to QQEW, has seen year-to-date inflows of nearly $36 million. QQQE, which is up 6.4 percent over the past month, closed 2.7 percent below its all-time high Tuesday.
Image Credit: <a href="https://pixabay.com/en/alphabet-letter-font-type-text-730581/">Public Domain</a>

Long Ideas

Broad U.S. Equity ETFs

Intraday Update

Trading Ideas

NFLX

PCLN

QQQE

QQQ Qualifies For New Highs, But Some Investors Miss Out

PayPal Holdings Inc. (NASDAQ: <a class="ticker" href="/stock/pypl#NASDAQ">PYPL</a>) is nearly five months removed from its spin-off from eBay Inc. (NASDAQ: <a class="ticker" href="/stock/ebay#NASDAQ">EBAY</a>), but that is not stopping the provider of electronic and mobile payments from gaining entry into a wide array of exchange trade funds.

	One of the next ETFs to hold shares of PayPal is one of the largest, most well-known ETFs in the world. After the close of U.S. markets Tuesday, Nasdaq said the NASDAQ-100 Index (NDX) will add shares of PayPal before the market open on November 11. PayPal will replace Broadcom Corp. (NASDAQ: <a class="ticker" href="/stock/brcm#NASDAQ">BRCM</a>) in the NASDAQ-100, <a href="http://finance.yahoo.com/news/paypal-holdings-inc-join-nasdaq-010500412.html">according to a statement</a>.

	That means California-based PayPal will become eligible for inclusion in the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), the NASDAQ-100 tracking ETF. Up 11.4 percent this year, the $42.9 billion QQQ hit an all-time Tuesday. Due to the index provider&#39;s efforts to include multiple share classes, QQQ is home to 109 stocks, not 100.

	Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5949893/venmo-monetization-means-paypal-is-a-buy">Venmo Monetization Means PayPal Is A Buy</a>

	PayPal&#39;s inclusion in the NASDAQ-100 also means the stock will be included in the equal-weight equivalents of that index and that means PayPal could soon join the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>) and the First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>).

	Just over 50 ETFs currently hold shares of PayPal, but none have a weight to the stock that can rival that of the PureFunds ISE Mobile Payments ETF (NYSE: IPAY). PayPal is&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5755976/a-surprising-buffett-etf">IPAY&#39;s third-largest holding</a> at a weight of almost 5.8 percent.

	PAY, which debuted in July, follows the ISE Mobile Payments Index. That index &ldquo;tracks companies at the forefront of the mobile, electronic, and digital payments industry,&rdquo; according to a&nbsp;<a href="http://www.marketwatch.com/story/purefunds-factor-advisors-and-ise-etf-ventures-launch-two-new-specialty-tech-etfs-2015-07-16">statement from PureFunds</a>.

	The Nasdaq statement did not highlight what PayPal&#39;s weight in the NASDAQ-100 will be. QQQ currently allocates nearly 13 percent of its weight to Apple Inc. (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>). None of the ETF&#39;s other holdings command a weight of more than 7.9 percent.

Sector ETFs

Specialty ETFs

BRCM

EBAY

PYPL

PayPal Finds Another ETF Home, Will Join QQQ

The world of indexing is typically dominated by market capitalization weighted methodologies that give the largest allocation to the biggest stocks. However, that can often lend itself to these mega-companies having too great of a pull on the performance of the overall strategy.

	For example, the PowerShares QQQ Trust, Series 1 (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>) tracks the 100 largest non-financial stocks on the NASDAQ stock exchange using a market cap weighted approach. The largest holding in QQQ is Apple Inc.&nbsp;(NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>), which accounts for 14 percent of the total assets. Apple is therefore in a position to significantly influence the total return of the fund.

	A varying style to the market cap index is an equal-weighting methodology that gives every stock in an established index a proportionate share of the asset allocation. This allows for smaller companies to have a more pronounced impact on the total return of the fund.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/etfs/sector-etfs/14/11/4984312/a-unique-global-etf-for-a-commodity-rebound">A Unique Global ETF For A Commodity Rebound</a></bzrelatedlink>

	The First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) is the equal-weighted peer of QQQ and owns the same underlying 100 stocks. Each stock within the index is given a 1-percent allocation of the total assets and rebalanced on a quarterly basis.

	So far this year, QQEW has slightly underperformed the benchmark index because of the generous returns of mega-cap stocks such as Apple and <a href="http://www.benzinga.com/topic/microsoft">Microsoft</a>. However, this could certainly change if the largest companies started to lag their smaller competitors.
<div id="file-preview">
	<a href="https://www.benzinga.com/imce?app=nomatter%7Cimceload%40imceInline.load#" title=""><img alt="qqq_qqew.png" height="284" src="https://www.benzinga.com/files/u79448/qqq_qqew.png" width="460" /></a></div>

	Equal-weight ETFs typically shine during market cycles that favor smaller companies within the same industry group or sector.

	The most well-known equal-weight index is the Rydex S&amp;P 500 Equal Weight ETF (NYSE: <a class="ticker" href="/stock/rsp#NYSE">RSP</a>), which has more than $9.1 billion in total assets. Interestingly enough, RSP is moving almost in lock step with its market cap equivalent SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) this year. Both ETFs have gained approximately 10.5 percent since the beginning of 2014.

	While the equal-weight methodology hasn&#39;t had a significant impact on total return this year, in past instances it has added notable outperformance. Last year for instance, RSP added more than 3 percent in additional return versus SPY.

Rydex ETF Trust Rydex S&P Equal Weight ETF

Checking In On Equal-Weight ETFs This Year

Green Mountain Coffee Roasters (NASDAQ: <a class="ticker" href="/stock/gmcr#NASDAQ">GMCR</a>) is headed back to NASDAQ-100 for an encore run in the index, meaning the stock famously sold short by David Einhorn's Greenlight Capital will soon rejoin the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>). The $36.5 billion QQQ is also known as the NASDAQ 100 tracking ETF.

	Green Mountain will also join the NASDAQ-100 Equal Weighted Index (NASDAQ: NDXE) and the NASDAQ-100 Ex-Tech Sector Index (NASDAQ: NDXX) prior to market open on Thursday, August 22, 2013, according to a statement by NASDAQ OMX Global Indexes. The statement was released Thursday <a href="http://finance.yahoo.com/news/green-mountain-coffee-roasters-inc-000500485.html">after the close of U.S. markets</a>.

	Green Mountain had market value of $11.1 billion at Thursday's close, implying it will be relatively scant part of QQQ's lineup. Discount retailer Dollar Tree (NASDAQ: <a class="ticker" href="/stock/dltr#NASDAQ">DLTR</a>) has a market cap of nearly $11.5 billion, but a weight of just 0.33 percent in QQQ.

	QQQ, the sixth-largest U.S. ETF, has made some exciting changes this year, including replacing Oracle (NYSE: <a class="ticker" href="/stock/orcl#NYSE">ORCL</a>) <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3736212/tesla-gets-a-big-etf-promotion-tsla">with Elon Musk's electric car maker</a> Tesla (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>). Since July 16, a day after joining the NASDAQ 100, shares of Tesla are up 28.1 percent.

	However, Green Mountain shareholders may not want their stock to rejoin the index. It was booted from the NASDAQ 100 late last year and has risen 70 percent this year.

	Green Mountain's membership in the NASDAQ-100 Equal Weighted Index means the stock is eligible to become part of the First Trust NASDAQ-100 Equal Weight Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) and the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>).

	Currently, Green Mountain is not a significant holding in many ETFs. The PowerShares Dynamic Food &amp; Beverage Portfolio (NYSE: <a class="ticker" href="/stock/pbj#NYSE">PBJ</a>), home to $322.4 in assets, has one of the larger weights to the stock among ETFs at 2.6 percent.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

	Disclosure: Author does not own any of the securities mentioned here.

Events

Pre-Market Outlook

Movers

Return To Me Says QQQ To Green Mountain 

Quiet as it has been kept, Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), the largest U.S. oil company, is in the midst of a 10-day losing streak.

	Yet over the past month, shares of Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) are up more than 12 percent, meaning the iPad maker is back to being the world's largest company by market value with a $16 billion lead over Exxon at the start of trading Wednesday.

	That also means Apple is quietly reasserting its dominance over some of the largest <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">technology sector ETFs</a>. Investors in those funds can only hope this time is different.

	The iShares U.S. Technology ETF (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>) now sports a 16.9 percent weight to Apple, one of the largest allocations to the stock of any ETF. That is far cry from the 22.2 percent IYW allocated to Apple in April 2012 when Apple traded around $610. The stock would proceed to race to $700 in September before commencing an epic tailspin.

	Still, IYW's current weight to Apple, and that of the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), is 100 basis points higher today than where it <a href="http://www.benzinga.com/news/earnings/13/04/3522083/a-guide-to-how-some-etfs-may-react-post-apple-earnings">was in April 2013</a>. QQQ devotes 12.4 percent of its weight to Apple, nearly 500 basis points more than the weight given to Microsoft (NASDAQ: <a class="ticker" href="/stock/msft#NASDAQ">MSFT</a>), the ETF's second-largest holding.

	The Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) has seen its Apple allocation rise to almost 14.2 percent as of Monday from 12.8 percent in April. That is 635 basis points ahead of the weight given to Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>), XLK's number two holdings.

	Since IYW, QQQ and XLK are market cap-weighted, these funds have to make Apple their largest holding. A stock holding a dominant position such as the one held by Apple in these ETFs can work. It has in the past. Until it does not.

	Related: <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3587943/two-top-ideas-among-fundamentally-weighted-etfs">Two Top Ideas Among Fundamentally-Weighted ETFs</a>.

	Shares of Apple are off 15.3 percent year-to-date, but IYW and XLK are up an average of 7.3 percent, indicating the ETFs are getting some help from the likes of Google, Cisco (NASDAQ: <a class="ticker" href="/stock/csco#NASDAQ">CSCO</a>) and others. Still, those are market-lagging returns, proving that Apple has adversely impacted those ETFs. XLK is merely the second-best <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3792951/spy-banks-could-be-boss-again">performer among the nine SPDRs funds</a> this year.

	As for QQQ, that ETF is up nearly 14 percent year-to-date, but it has the smallest allocation to Apple of the three funds mentioned here. It also has the largest weight to Internet stocks and a helpful 14 percent weight to health care names, which on the Nasdaq means plenty of biotechnology stocks.

	ETF investors that were previously burned by Apple's decline can guard against a sequel and still grab ample technology exposure with several ETFs. The First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) is a barely more than one percent weight to Apple, but the fund has surged 21 percent this.

	Dividend ETFs <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/08/3817108/as-tech-dividends-rise-etf-outpaces-some-key-holdings">are options to consider as well</a> because technology is now the largest dividend-paying sector in the U.S. and Apple is part of the reason for the tech dividend boom. The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: <a class="ticker" href="/stock/tdiv#NASDAQ">TDIV</a>) has an 8.1 percent weight to Apple.

	The WisdomTree U.S. Dividend Growth Fund (NASDAQ: <a class="ticker" href="/stock/dgrw#NASDAQ">DGRW</a>) has a 20 percent weight to tech and Apple is the new ETF's largest holding at just under five percent.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Short Ideas

Dividends

New ETFs

CSCO

DGRW

GOOG

iShares Dow Jones US Technology Sector Index Fund

TDIV

Will This Time Be Different? Apple Back To Dominating Tech ETFs

Electric car maker Tesla (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>) is no stranger to fanfare.

	The company and its high-flying shares got a little bit more of that on Monday evening when NASDAQ OMX Global Indexes announced the stock will replace Oracle (NASDAQ: <a class="ticker" href="/stock/orcl#NASDAQ">ORCL</a>) as a member of the NASDAQ-100 Index (NASDAQ: NDX).

	Tesla will join the NASDAQ-100 and the NASDAQ-100 Equal Weight Index (NASDAQ: NDXE) <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3736212/tesla-gets-a-big-etf-promotion-tsla">on July 15</a> making the stock eligible for inclusion in ETFs such as the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>) and the First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>).

	As a story stock, Tesla is also a controversial stock. Critics say the valuation is stretched. Supporters say the company is revolutionizing the auto industry. No matter what one's feeling are about Elon Musk's company, chances are those feelings are strong. An <a href="http://www.benzinga.com/news/13/07/3737959/tesla-joins-the-nasdaq-100-where-next-tsla">almost 32 percent short interest as of mid-June</a> despite the fact that the shares have tripled in the past 90 days says as much.

	Investors are even arguing whether or not the move to the NASDAQ-100 is already priced into shares of Tesla. Maybe it is, assuming the fund managers that benchmark to that index have already bought exactly the amount of Tesla stock they need to be inline with index parameters.

	Those looking for clues regarding the impact a jump to the NASDAQ-100 and QQQ can have on a stock just need to go back to December when 10 additions and subtractions to the index, and subsequently the ETF, were made.

	The following 10 stocks became members of the NASDAQ-100 on December 24, 2012: Analog Devices (NASDAQ: <a class="ticker" href="/stock/adi#NASDAQ">ADI</a>), Catamaran (NASDAQ: <a class="ticker" href="/stock/ctrx#NASDAQ">CTRX</a>), Discovery Communications (NASDAQ: <a class="ticker" href="/stock/disca#NASDAQ">DISCA</a>), Equinix (NASDAQ: <a class="ticker" href="/stock/eqix#NASDAQ">EQIX</a>), Liberty Global (NASDAQ: <a class="ticker" href="/stock/lbtya#NASDAQ">LBTYA</a>), Liberty Media (NASDAQ: <a class="ticker" href="/stock/lmca#NASDAQ">LMCA</a>), Regeneron Pharmaceuticals (NASDAQ: <a class="ticker" href="/stock/regn#NASDAQ">REGN</a>), SBA Communications (NASDAQ: <a class="ticker" href="/stock/sbac#NASDAQ">SBAC</a>), Verisk Analytics (NASDAQ: <a class="ticker" href="/stock/vrsk#NASDAQ">VRSK</a>) and Western Digital (NASDAQ: <a class="ticker" href="/stock/wdc#NASDAQ">WDC</a>).

	Over the month that followed, all of those stocks rose with Regeneron being the worst performer with a gain of 0.6 percent. Western Digital was the best, gaining 14.3 percent. The NASDAQ-100 is re-ranked each year in December, timed to coincide with the quadruple witch expiration Friday of the quarter, <a href="http://ir.nasdaqomx.com/releasedetail.cfm?releaseid=727089">according to NASDAQ OMX Global Indexes</a>.

	None of those stocks are prominent members of QQQ. Combined, the 10 represent less than 3.8 percent of the ETF's weight with Regeneron receiving the largest weight at 0.54 percent. Said another way, Cisco (NASDAQ: <a class="ticker" href="/stock/csco#NASDAQ">CSCO</a>) alone accounts for almost 3.9 percent of QQQ.

	Based on a current market cap of $14.1 billion, if Tesla was a QQQ holding today, it would have slightly less of an impact on the ETF than Analog Devices. That stocks has a weight of 0.41 percent in the ETF, <a href="http://www.invescopowershares.com/products/holdings.aspx?ticker=QQQ">according to PowerShares data</a>.

	It is safe to say that Tesla's inclusion in a particular index is not going to do anything about the stock's valuations or motivate any to buy or not buy its cars. And although the stock has been on fire, Tesla bulls may want to see the stock booted from the index. Why? Because Netflix (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>) almost doubled in the first quarter of this year after being removed from the NASDAQ-100 last December. The stock has since rejoined the index. Green Mountain Coffee Roasters (NASDAQ: <a class="ticker" href="/stock/gmcr#NASDAQ">GMCR</a>) was removed with Netflix and has not rejoined the NASDAQ-100. That stock is up 67 percent this year.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

CTRX

DISCA

EQIX

GMCR

LBTYA

LMCA

ORCL

REGN

SBAC

TSLA

VRSK

What to Expect From Tesla Shares After Joining QQQ (TSLA)

Elon Musk's Tesla (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>), the electric car maker whose shares have more than tripled this year, is going to be found in more ETFs after NASDAQ OMX Global Indexes announced the stock will replace Oracle (NASDAQ: <a class="ticker" href="/stock/orcl#NASDAQ">ORCL</a>) as a member of the Nasdaq 100.

	Enterprise software maker is leaving the Nasdaq 100 because it is switching to a listing on the New York Stock Exchange. Oracle becomes the largest company by market value to make an exchange switch.

	California-based Tesla will become a component of the NASDAQ-100 Index (Nasdaq: NDX) and the NASDAQ-100 Equal Weighted Index (Nasdaq: NDXE) prior to market open on Monday, July 15, <a href="http://finance.yahoo.com/news/tesla-motors-inc-join-nasdaq-000500618.html">according to a statement</a> issued by NASDAQ OMX Global Indexes.

	That means Tesla will become a member of the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), the NASDAQ 100 tracking ETF. Oracle is currently the fourth-largest member of the cap-weighted QQQ with a weight of 4.25 percent. Based on Tesla's market value of $14.05 billion at Monday's close, the stock would receive a larger weight in QQQ if it entered the ETF today than current holdings such as Wynn Resorts (NASDAQ: <a class="ticker" href="/stock/wynn#NASDAQ">WYNN</a>), KLA-Tencor (NASDAQ: <a class="ticker" href="/stock/klac#NASDAQ">KLAC</a>) and Expedia (NASDAQ: <a class="ticker" href="/stock/expe#NASDAQ">EXPE</a>), just to name a few.

	Since Tesla will also be included in the NASDAQ-100 Equal Weighted Index, the stock will also likely become part of the First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) and the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>).

	Some ETFs have already <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/06/3651498/tesla-becomes-apple-for-these-etfs">been benefiting from holding Tesla</a>, a trend that could continue as fund managers that benchmark to the NASDAQ 100 are forced to scoop up the stock.

	Those ETFs include the First Trust NASDAQ® Clean Edge Green Energy Index Fund (NASDAQ: <a class="ticker" href="/stock/qcln#NASDAQ">QCLN</a>) and the Market Vectors Global Alternative Energy ETF (NYSE: <a class="ticker" href="/stock/gex#NYSE">GEX</a>). GEX and QCLN have weights of 11.8 and 9.4 percent, respectively, to Tesla.

	Then there is the PowerShares WilderHill Clean Energy Portfolio (NYSE: <a class="ticker" href="/stock/pbw#NYSE">PBW</a>), which has been previously been referred to as the <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3613365/an-etf-for-elon-musk-fans">Elon Musk ETF</a> because the fund features exposure to Tesla and Musk's other company, SolarCity (NASDAQ: <a class="ticker" href="/stock/scty#NASDAQ">SCTY</a>).

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

EXPE

Market Vectors Global Alternative Energy ETF Trust

KLAC

PowerShares Exchange Traded Fund Trust WilderHill Clean Energy Portfolio

First Trust NASDAQ Clean Edge Green Energy Index Fund

QCLN

SCTY

WYNN

Tesla Gets a Big ETF Promotion (TSLA)

The Sharpe ratio, a risk measurement and management tool named for Nobel laureate William F. Sharpe, is as easy to explain as it is important. At its core, the Sharpe Ratio tells investors whether a portfolio's success is due to <a href="http://www.investopedia.com/terms/s/sharperatio.asp#axzz2IAj9IwaV">savvy investment decisions or taking on unnecessary risk</a>.

Calculated by subtracting the risk free rate – such as the returns offered by short-term Treasuries – from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns, according to Investopedia, the Share Ratio tells investors just how good a portfolio's risk-adjusted performance has been. 

A high Sharpe Ratio indicates good risk-adjusted performance while a low Sharpe Ratio indicates investors would have been better off with a more conservative investment vehicle. 

Since equity-based ETFs are baskets of stocks, or portfolios themselves, using the Sharpe Ratio to find winning funds makes sense. What follows just a few of the ETF this Sharpe Ratio screen. Screen parameters: Sharpe Ratio of 0.5 and higher, three-year total returns of at least 10 percent, expense ratio of below one percent and a beta against the S&amp;P 500 of no higher than 1.5. Please note this screen was <a href="https://research.zecco.com/research/etf-screener.asp">run on Zecco</a>, which near as we could tell, offers one of the only free Sharpe Ratio screeners.

Vanguard Dividend Appreciation ETF (NYSE: <a class="ticker" href="/stock/vig#NYSE">VIG</a>)
The aforementioned screen turned up 230 and equity-based ETFs and perhaps not surprisingly, nearly 10 percent of that group hails from the Vanguard family. VIG is already the largest dividend ETF by assets, but that shallow metric does not indicate the fund's true worth to conservative investors, but the screen does.

VIG has an expense ratio of just 0.13 percent, making it less expensive than 88 percent of comparable funds, <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=0920&amp;FundIntExt=INT">according to Vanguard</a>. VIG's beta against the S&amp;P 500 is just 0.82 percent and that does not come by virtue of an excessive weight to utilities names, a favorite beta-reducing trick of some ETFs. That sector accounts for just 1.8 percent of VIG's weight.

With a Sharpe Ratio 0.85, VIG has gained almost 11 percent in the past three years.

iShares MSCI Thailand Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/thd#NYSE">THD</a>)
While the screen did not turn out to be heavy on emerging markets ETFs, the total number that met the criteria was decent and those funds that did make the cut offer investors exposure to both Asian and Latin American developing markets.

As is the case with VIG, THD's inclusion on this list probably is not a surprise to those that are familiar with the fund. The lone Thailand-specific ETF has been one of the best-performing ETFs of any type <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3208282/10-for-13-emerging-markets-etfs-for-2013">since the March 2009 market bottom</a>. Fees of 0.6 percent mean THD comes cheaper than the comparable China fund.

THD's Sharpe Ratio, according to Zecco data, is 1.1, meaning it is double that of the Sharpe Ratio on the supposedly more conservative iShares MSCI South Korea Index Fund (NYSE: <a class="ticker" href="/stock/ewy#NYSE">EWY</a>).

First Trust NASDAQ-100 Equal Weighted Index (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>)
An underrated way of grabbing technology sector exposure <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3249669/apples-slide-highlights-advantages-of-equal-weight-etfs">while dodging single-stock risk</a> QQEW has recently performed better than some marquee tech ETFs, such as the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>).

However, there is more to QQEW's story. In addition to a solid Sharpe Ratio of 0.61, QQEW offers investors a low price/cash flow ratio of 11.08, <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=QQEW">according to First Trust data</a>. That is relevant because securities with low price/cash flow ratios <a href="http://www.thepatternsite.com/CashFlow.html">have a tendency to outperform those with high price/cash flow ratios</a>. 

Other ETFs that appeared in the screen with Sharpe Ratios above follow here with the Sharpe Ratios after the tickers: First Trust Morningstar Dividend Leaders Index Fund (NYSE: <a class="ticker" href="/stock/fdl#NYSE">FDL</a>) 1.2, iShares NASDAQ Biotechnology Index Fund (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) 1.14, PowerShares Dynamic Cosnumer Discretionary Portfolio (NYSE: <a class="ticker" href="/stock/psl#NYSE">PSL</a>), 1.1, Guggenheim S&amp;P 500 Equal Weight Consumer Staples ETF (NYSE: <a class="ticker" href="/stock/rhs#NYSE">RHS</a>) 1.29 and the WisdomTree Dividend Ex-Financials Fund (NYSE: <a class="ticker" href="/stock/dtn#NYSE">DTN</a>) 1.21.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Emerging Market ETFs

Technicals

First Trust Morningstar Dividend Leaders Index Fund

PowerShares Dynamicnsumer Staples Sector Portfolio

Rydex ETF Trust Rydex S&P Equal Weightnsumer Staples ETF

iShares MSCI Thailand Investable Market Index Fund

Use The Sharpe Ratio For Profits With These ETFs

Apple's (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) recent slide from stratospheric heights has reminded ETF investors of the dangers of owning funds that are excessively weighted to just one or two stocks. 

The risks of <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">too much Apple</a> have been previously well-documented and the scenario is arguably as simple as this: Large weights in any ETF to a small number of stocks work...until they do not.

Everything smells like roses for an ETF or mutual fund with substantial Apple exposure as long as the stock keeps going up. Obviously, that has not been the case in recent months as Apple has plunged from about $702 on September 19, 2012 to just over $506 at Wednesday's close.

That tumble has had a predictable impact on some noteworthy ETFs that benefited from Apple's run to unprecedented heights last year. Not including Wednesday's gains, the iShares Dow Jones U.S. Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>) has slid 8.6 percent since Apple topped $700 on September 19. IYW, which has $1.54 billion in assets under management, has the largest allocation to Apple of any ETF at 19.1 percent.

The Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), which currently features a 15.94 percent weight to Apple, is off 7.7 percent since September 19 while the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>) has shed just under six percent. Commonly referred to as the Nasdaq 100 tracking ETF, QQQ now has a weight of 14.6 to the iPad maker.

All is not lost for investors looking to maintain or initiate positions in the technology sector even as Apple struggles to regain its lost luster. Something else that <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/04/2470963/apple-and-etfs-danger-ahead-aapl-qqq-xlk">has been previously highlighted</a> is the utility of equal-weight technology sector ETFs in the face of large Apple declines.

That trend has repeated itself during Apple's plunge from $700. Take the case of the Guggenheim S&amp;P 500 Equal Weight Technology ETF (NYSE: <a class="ticker" href="/stock/ryt#NYSE">RYT</a>). Apple accounts for just 1.29 percent of that fund's weight. Putting allocation into context, at 1.31 percent of RYT, First Solar (NASDAQ: <a class="ticker" href="/stock/fslr#NASDAQ">FSLR</a>) is a larger part of the ETF's lineup than Apple. 

RYT is up just 1.1 percent since September 19, but that is far better than what XLK and friends have offered. Here is another factoid that is vital to note: In the past year, XLK is up 11.5 percent, while RYT is up 11.1 percent, indicating that investors did not sacrifice much by skimping on Apple exposure.

Then there is the case of the First Trust NASDAQ-100 Equal Weighted Index (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>), which is an equal-weight answer to QQQ. Apple represents just 0.93 percent of that ETF's weight. Said another way, Whole Foods (NASDAQ: <a class="ticker" href="/stock/wfm#NASDAQ">WFM</a>) and Monster Beverage (NASDAQ: <a class="ticker" href="/stock/mnst#NASDAQ">MNST</a>) are slightly bigger components in QQEW than Apple.

Hardly any Apple has meant a 2.8 gain for QQEW since September 19, and QQEW is up 12.5 percent in the past year. Obviously, that is better than XLK. That performance also means that despite a weight to Apple that is hundreds of times larger than QQEW's, QQQ could only outperform its equal-weight rival by 100 basis points over the past year.

The point here is not to debate the bull case, or lack thereof, for shares of Apple. Analysts, pundits and owners of the stock can do that. What is important to note is that because of Apple's still lofty price tag, many investors use ETFs to gain exposure to the stock. A lot of those investors know about QQQ, XLK and friends, but they may not know about the merits of RYT, QQEW and related fare. Perhaps that is what the Apple/ETF conversation should be about now.

For more on ETFs, click <a href="www.benzinga.com/etfs">here</a>.

After-Hours Center

FSLR

MNST

Rydex ETF Trust Rydex S&P Equal Weight Technology ETF

Apple's Slide Highlights Advantages of Equal-Weight ETFs

Shares of social media giant Facebook (NASDAQ: <a class="ticker" href="/stock/fb#NASDAQ">FB</a>) could get a lift over the next several days as fund managers and ETF sponsors acquire the stock in anticipation of it joining the Nasdaq 100 at the start of trading on Wednesday, December 12, 2012.

NASDAQ OMX (NASDAQ: <a class="ticker" href="/stock/ndaq#NASDAQ">NDAQ</a>) made the announcement after the close of U.S. markets on Tuesday. The news means Facebook is headed for the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), the ETF often referred to as the "Nasdaq 100 tracking ETF." 

With $30.9 billion in assets under management, QQQ is not only one of the largest U.S.-listed ETFs of any kind, it will also be the largest ETF to be home to Facebook. Currently, the largest ETF by assets to <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/3039464/facebook-via-etfs">hold shares of Facebook is the First Trust Dow Jones Internet Index Fund (NYSE: </a><a class="ticker" href="/stock/fdn#NYSE">FDN</a>).

Facebook will replace Indian information technology firm Infosys (NASDAQ: <a class="ticker" href="/stock/infy#NASDAQ">INFY</a>). That stock currently accounts for 0.1 percent of QQQ's weight.

While most investors are likely to focus on Facebook's addition to QQQ because it is a large, popular ETF, it should be noted that <a href="http://finance.yahoo.com/news/facebook-inc-join-nasdaq-100-010500309.html">the statement issued by NASDAQ OMX points out</a> Facebook will join the the NASDAQ-100 Equal Weighted Index (Nasdaq:NDXE), and the NASDAQ-100 Technology Sector Index (Nasdaq:NDXT) as well.

The NASDAQ-100 Technology Sector Index is the index tracked by the First Trust NASDAQ-100-Technology Sector Index Fund is (NASDAQ: <a class="ticker" href="/stock/qtec#NASDAQ">QTEC</a>). Home to 44 stocks, QTEC is not exactly small with nearly $113 million in assets. 

The NASDAQ-100 Equal Weighted Index is the index tracked by the First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>) and the Direxion NASDAQ-100 Equal Weighted Index Shares (NASDAQ: <a class="ticker" href="/stock/qqqe#NASDAQ">QQQE</a>). 

Currently, the ETF with largest weight to Facebook is the First Trust US IPO Index Fund (NYSE: <a class="ticker" href="/stock/fpx#NYSE">FPX</a>) at almost 10 percent. The first ETF to have included Facebook in its lineup was the Global X Social Media Index ETF (NYSE: <a class="ticker" href="/stock/socl#NYSE">SOCL</a>).

For more on Facebook and ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/3039464/facebook-via-etfs">here</a>.

First Trust Dow Jones Internet Index Fund

INFY

NDAQ

First Trust NASDAQ-100 Technology Index Fund

QTEC

SOCL

Facebook Heading to Nasdaq 100; Will Join at Least 4 More ETFs

As investors have become more acquainted with exchange-traded products, some have wondered why so many broader market and sector funds are dominated by the largest companies. As Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) has shown investors, an ETF's excessive allocation to just one or two stocks is fine on the way, but <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">rather dangerous on the way down</a>.

The reason why the companies with largest market values loom large in so many ETFs is simple: Many ETFs use a cap-weighted methodology to assign weights to the components. For example, a cap-weighted ETF focused on U.S.-based energy producers would, more than likely, have Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) as its largest component, Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>) as its second-largest and so on.

There are alternatives to cap-weighting, namely in the form of equal-weight ETFs. The concept behind equal-weight equity-based ETFs is a compelling one. After all, one of the allures of ETFs is gaining exposure to multiple stocks through one fund and no one likes the nasty surprise of finding out their ETF is excessively weighted to just one or two stocks.

Some equal-weight ETFs have risen to acclaim over the years for outperforming their cap-weighted counterparts over long time horizons. Some toil in anonymity. Here is a look at a few of the more anonymous equal-weight ETFs that have the potential to deliver solid returns.

First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>)
Depending on one's view of Apple, QQEW is either an afterthought or the perfect tech ETF for the times. Apple, the world's largest company by market value, accounts for a scant 0.91 percent of QQEW. That means the iPad maker is 35 basis points "less important" to this ETF than Netflix (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>), the fund's largest holding.

These days, that is not a bad thing. As Apple has tumbled, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/3027207/can-apple-amazon-earnings-save-these-etfs">QQEW has shown its mettle</a>. In the past month, shares of Apple have plunged 9.5 percent, dragging the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>) to a loss of 4.7 percent in the process. Over the same period, QQQEW is off just 3.1 percent. 

Given Apple's large weight in QQQ, currently 18.9 percent, the premise here is simple. QQEW offers protection from downside in that stock while keeping investors exposed to the tech sector. Also consider the Direxion NASDAQ 100 Equal Weighted Shares (NYSE: <a class="ticker" href="/stock/qqqe#NYSE">QQQE</a>).

SPDR S&amp;P Health Care Equipment ETF (NYSE: <a class="ticker" href="/stock/xhe#NYSE">XHE</a>)
Some folks may not realize that the SPDR sector funds, not the select sector SPDRs such as the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), are actually equal-weight products. They are not perfect in terms of equal weights, meaning XHE does not have 100 components each accounting for one percent.

Rather, XHE has 58 holdings and the largest receives a weight of 2.89 percent. XHE's approach is working. Year-to-date, the ETF has outperformed its primary rival, the iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: <a class="ticker" href="/stock/ihi#NYSE">IHI</a>), by 150 basis points.

Guggenheim S&amp;P 500 Equal Weight Health Care ETF (NYSE: <a class="ticker" href="/stock/ryh#NYSE">RYH</a>)
RYH will celebrate its sixth birthday on Thursday, but the fund has just $53.9 million in assets under management, indicating that investors have not yet taken note of the utility of this ETF. Where RYH stands out is at the sub-sector level where it spreads about 78 percent of its weight between health care services providers, equipment makers and traditional pharmaceuticals names.

While RYH does not track the same index as XLV, the two are bound to draw comparisons to each other. XLV, the largest health care ETF with $5.4 billion in assets, is up 16.2 percent this year. That is only marginally better than RYH and RYH could easily be viewed as the more attractive option because of its equal status.

Figure it this way. If Johnson &amp; Johnson (NYSE: <a class="ticker" href="/stock/jnj#NYSE">JNJ</a>), Pfizer (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>) combined for 34 percent of XLV's weight. Those stocks are intimately correlated to each other, implying investors do not have to worry about single-stock risk with XLV. They have to be concerned with potential three-stock (maybe more) risk with this ETF.

Considering that pharmaceuticals stocks are performing well this year, it would be reasonable to expect RYH would be lagging an ETF like XLV by a wider margin. That has not been the case and that makes RYH all the more attractive.

For more on equal-weight ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/11/08/1830998/five-equal-weight-etfs-your-broker-forgot-to-mention">here</a>.

iShares Dow Jones US Medical Devices Index Fund

Rydex ETF Trust Rydex S&P Equal Weight Health ETF

More Equal-Weight ETFs Your Broker Forgot to Mention 

Year-to-date, the technology sector has rewarded investors. The Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) has jumped almost 14 percent and tech's good fortunes have been a boon for the broader market. The sector accounts for the largest weight within the S&amp;P 500 with an allocation <a href="https://www.spdrs.com/product/fund.seam?ticker=SPY">of almost 19.3 percent</a>.

Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>), and to a lesser extent Amazon (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>), have been two of the primary drivers of the tech group's success this year. In 2012, Apple has soared 51.2 percent while Amazon has surged 31.6 percent. However, those stocks have taken ill in recent weeks as both have tumbled more than nine percent in the past month.

Both have a chance to set things right and ignite a market rebound when they report earnings after the close today. Apple, the world's largest company by market value, is expected to show a profit of $8.33 a share while Amazon is expected to swing to a loss of <a href="http://www.marketwatch.com/story/big-earnings-to-watch-thursday-apple-amazon-pg-2012-10-25?siteid=yhoof2">seven cents per share</a>. 

Given the size of Apple and Amazon's status as a prime consumer discretionary play, the near-term fortunes of some marquee ETFs hang in the balance. The following ETFs could jump if Apple and Amazon beat on the top and bottom lines and then guide higher for the current quarter. Disappointing reports would likely plague these funds.

Technology Select Sector SPDR
The aforementioned XLK has dealt with a spate of troubling reports this earnings season. Constituent ranging from Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>) to IBM (NYSE: <a class="ticker" href="/stock/ibm#NYSE">IBM</a>) have done more harm than good, but Apple can save the day here. The reason is simple. XLK is a traditional cap-weighted ETF, meaning the larger a company's market value, the bigger the weight it receives in XLK. 

With an allocation north of 20 percent, Apple can save the day, week and perhaps for XLK. The ETF is engaged in a dangerous flirtation with its 200-day moving average, implying that if Apple does not deliver the goods, further declines will be seen.

PowerShares NASDAQ Internet Portfolio (NASDAQ: <a class="ticker" href="/stock/pnqi#NASDAQ">PNQI</a>)
Like XLK, PNQI has had to endure a rash of less-than-impressive earnings reports. At almost eight percent of the ETF's weight, Google has done PNQI no favors. Amazon's weight of just 7.4 percent of PNQI's lineup, but that is not the point. The overarching theme here is that Amazon is the dominant online consumer discretionary company and discretionary names account for over 24 percent of PNQI's weight. This ETF is in desperate need of some relief having tumbled 4.7 percent in the past month.

First Trust NASDAQ-100 Equal Weight Index Fund (NASDAQ: <a class="ticker" href="/stock/qqew#NASDAQ">QQEW</a>)
The obvious question is why is the First Trust NASDAQ-100 Equal Weight Index Fund appearing on this list over the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>). After all, Apple and Amazon combine for almost 23 percent of the latter's weight. 

Here's the answer: It is great to have an ETF with an excessive weight to Apple on the way up. On the way down, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">it is another story, and not a happy one, altogether</a>.

Amazon and Apple combine for just 1.87 percent of QQEW's weight. Yes, that means the ETF is up just 8.8 percent this compared to a 16.5 percent gain for QQQ. Think about that and it is not that bad: QQEW trails QQQ by less than 800 basis, although the former's exposure to two of the highest-flying tech names is at a 2,200-basis point deficit to the later. 

Bottom line: QQEW can keep investors in the tech game and relatively safe from any negative Apple or Amazon surprises.

For more on Apple and ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2499691/apples-slide-exposes-flaws-in-some-etfs-aapl-qqq-iyw">here</a>.

PNQI

Can Apple, Amazon Earnings Save These ETFs?

Earlier this month, Benzinga examined the impact Apple (Nasdaq: <a class="ticker" href="/stock/aapl#Nasdaq">AAPL</a>) is having on select ETFs that offer <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/04/2470963/apple-and-etfs-danger-ahead-aapl-qqq-xlk">excessive weights to the tech juggernaut</a>. It was a cautionary tale and our interview with Street One Financial President Scott Freeze highlighted an important fact: All is fine and dandy for an ETF or mutual fund with substantial Apple exposure as long as the stock keeps going up. 

Whether it's just a breather before starting a new leg higher or legitimate cause for concern, Apple has not been moving higher. The stock has slid almost 6% since our piece on April 4 and nearly 7% since April 10. 

The pain for ETFs with exposure to Apple that can be considered dangerously large has been predictable. Yes, it should be noted that Google (Nasdaq: <a class="ticker" href="/stock/goog#Nasdaq">GOOG</a>), the largest U.S. Internet search provider, has slumped since delivering earnings last Thursday and announcing a controversial new share structure. In other words, Google's woes have served as icing on the cake for tech ETFs suffering from something that just a few weeks ago was helping them: Obscene weights to Apple.

The iShares Dow Jones US Technology Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>), the ETF with the largest weight to Apple at 22.16%, is almost 2% since April 10. Google also figures somewhat prominently in this ETF with a weight of 6.3%. If IYW violates support at the 50-day moving average right around $75, the ensuing decline could be nasty.

The PowerShares QQQ (Nasdaq: <a class="ticker" href="/stock/qqq#Nasdaq">QQQ</a>) is also fighting to hold support at its 50-day line. Apple accounts for 19.1% of QQQ's weight, so it's not surprising to see the fund down 2.3% in the past five days including today. 

Different ETF, same problems: Big weight to Apple and fighting to hold its 50-day moving average. That's what's happening now with the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), which features a 19.3% weight to Apple. XLK is down 1.7% since April 10.

The obscure FocusShares Morningstar Technology ETF (Nasdaq: <a class="ticker" href="/stock/ftq#Nasdaq">FTQ</a>), a valid <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2466996/apple-slices-these-sub-80-etfs-have-it-aapl-xlg-ftq">Apple play in its own right</a> is being hurt by that validity. An almost 21% weight to the iPad maker has FTQ down almost 2% in the past five days.

How about equal-weight ETFs with Apple exposure? As we noted earlier this month, the First Trust NASDAQ-100 Equal Weight ETF's (Nasdaq: <a class="ticker" href="/stock/qqew#Nasdaq">QQEW</a>) returns compared to the likes of QQQ and XLK were pretty good considering QQEW offers relatively scant exposure to Apple. The stock accounts for just 1.06% of QQEW's weight, making it the fund's seventeenth-largest holding. That puts Apple behind the likes of Starbucks (Nasdaq: <a class="ticker" href="/stock/sbux#Nasdaq">SBUX</a>), Baidu (Nasdaq: <a class="ticker" href="/stock/bidu#Nasdaq">BIDU</a>) and Priceline (Nasdaq: <a class="ticker" href="/stock/pcln#Nasdaq">PCLN</a>) to name a few. 

Overall, that's not a bad thing as QQEW has outperformed the other ETFs mentioned here in recent days. Then again, that just means being less bad as the equal-weight fund is down 1.6% since April 10.

For more on Apple-related ETF matters, please click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2466996/apple-slices-these-sub-80-etfs-have-it-aapl-xlg-ftq">HERE</a>.

BIDU

SBUX

Apple's Slide Exposes Flaws In Some ETFs (AAPL, QQQ, IYW)

Considering how ugly the broader market is today, the fact that Apple (Nasdaq: <a class="ticker" href="/stock/aapl#Nasdaq">AAPL</a>) is down just 1% with 30 minutes in the trading day isn't too shabby. One day and a 1% decline does not represent a break in what has become one of the most impressive single-stock bull trends in recent memory. That's a good thing because so many investors have not only been drawn to Apple shares, but to various ETFs <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2466996/apple-slices-these-sub-80-etfs-have-it-aapl-xlg-ftq">as proxies for the stock</a>.

Rather than incurring the potential downside risks of an ETF that features a large weight to Apple such as the PowerShares QQQ (Nasdaq: <a class="ticker" href="/stock/qqq#Nasdaq">QQQ</a>), Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) or the iShares Dow Jones US Technology Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>), the ETF with the largest allocation to Apple, the evidence is compelling regarding equal-weight ETFs with only modest weights to the iPhone maker.

After highlighting the risks posed to investors by <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/04/2470963/apple-and-etfs-danger-ahead-aapl-qqq-xlk">ETFs with excessive Apple allocations</a> Street One Financial President Scott Freeze talked with Benzinga today and continued to extol the virtues of equal-weight ETFs over those funds that bulging at the seams with Apple.

Freeze favors the First Trust NASDAQ-100 Equal Weighted Index Fund (Nasdaq: <a class="ticker" href="/stock/qqew#Nasdaq">QQEW</a>). Apple accounts for just 1.02% of QQEW's weight and isn't even among the ETF's top-30 holdings, but even with a significantly lower weight to Apple than QQQ or XLK QQEW "is actually performing better on the upside than one would expect and the downside risk isn't as high," Freeze said in the interview.

One potential risk to those that are long ETFs such as QQQ and XLK is the possibility of major indexes such as the Nasdaq 100 rebalancing, which it did last year, to lower Apple's weight. Freeze notes a snowball effect could take place.

"When an index is reweighted, there are sell orders from every ETF and mutual fund that hold Apple," Freeze said. "There could be 10 million Apple shares for market-on-close orders when the stock is trading at $620 and that could lead to Apple closing at $595. It's hard to find the offsetting order flow for 10 million-share orders." (Note this is a hypothetical example.)

Of course, that would create selling pressure in ETFs, but sizable orders to sell Apple would impact the likes of QQQ and XLK more than QQEW, according to Freeze.

Year-to-date, QQEW has trailed QQQ by less than 5% and XLK by less than 3%. The First Trust NASDAQ-100-Tech Index Fund (Nasdaq: <a class="ticker" href="/stock/qtec#Nasdaq">QTEC</a>), which isn't an equal-weight ETF, is up over 16% year-to-date despite an allocation of just 2.42% to Apple.

In other words, investors aren't giving much away in terms of performance to lower their exposure to Apple-specific risks. As Freeze said "Investors buy ETFs to avoid single-stock risk. Apple as one-fifth of an ETF defeats the purpose."

Freeze also mentioned the newly minted Direxion Nasdaq 100 Equal Weighted Index Shares ETF (NYSE: QQQE) as possible option for investors looking for an equal-weight approach to the Nasdaq 100. QQQE debuted in late March.

Another option to consider is the Guggenheim S&amp;P Equal Weight Technology ETF (NYSE: <a class="ticker" href="/stock/ryt#NYSE">RYT</a>). Apple is RYT's second-largest holding at1.59%, trailing the 1.68% Red Hat (NYSE: <a class="ticker" href="/stock/rht#NYSE">RHT</a>) garners. Still, RYT was up more than 17% year-to-date at the start of trading today.

Blasphemy: Equal-Weight Apple? (AAPL, QQQE, RYT)

The seemingly undaunted rise of Apple (Nasdaq: <a class="ticker" href="/stock/aapl#Nasdaq">AAPL</a>), the largest U.S. company by market value, has spurred plenty of conversation about the impact the stock is <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2466996/apple-slices-these-sub-80-etfs-have-it-aapl-xlg-ftq">having on ETFs</a>. To be sure, there are plenty of ETFs with which to gain <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2447308/cheap-slice-of-apple-pie-these-etfs-have-it-aapl-ixn-qqqv">exposure to the technology juggernaut</a>.

Possibly overlooked in the matter of Apple and ETFs is just how vulnerable these funds could be should shares of Apple experience a deep pullback. Street One Financial President Scott Freeze argues that ETFs are designed to give investors broad-based exposure to sectors, while minimizing individual stock risks.

Highlighting the PowerShares QQQ (Nasdaq: <a class="ticker" href="/stock/qqq#Nasdaq">QQQ</a>) and the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) as particularly vulnerable to an Apple sell-off, Freeze notes "the extreme weighting of Apple in the weighted Technology ETFs accounts for 10% of the YTD gains and 15% of the rolling 52 weeks gains. So Ex-Apple we see a single digit gain in the QQQ and XLK this year and flat performance for the rolling 52 weeks."

Apple accounted for 19.3% of QQQ's overall weight as of April 3 and 19.1% of XLK's weight as of April 2. The stock receives an allocation of 21.9% in the iShares Dow Jones U.S. Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>).

Maybe there's something to be said for an equal-weight approach. As Freeze notes, the First Trust NASDAQ-100 Equal Weight Index Fund (Nasdaq: <a class="ticker" href="/stock/qqew#Nasdaq">QQEW</a>) "is up 16% YTD and 7% rolling 52 weeks." Apple accounts for just 1.02% of QQEW's weight and isn't even among the ETF's top-30 holdings. As one example, Netflix (Nasdaq: <a class="ticker" href="/stock/nflx#Nasdaq">NFLX</a>) receives a larger allocation in QQEW than Apple.

QQEW has average daily volume of less than 52,000 shares compared to 46.94 million shares for QQQ and 9.19 million shares for XLK, according to Finviz data. Investors using QQQ and XLK for broad-based tech exposure "need to be aware of the perils that holding an ETF with such a heavy weighting of Apple can cause," Freeze said.

"Apple has much more competition for its core products now than it ever did before and questions persist about long term innovative products that will have the same impact as the I-Phone and I-Pad," Freeze said.

Anecdotal, but important examples exist regarding the impact Apple's ascent has had on Apple's market. When the Nasdaq 100 rebalanced in 2011, mainly to diminish Apple as its driving force, the stock fell to 12.3% of the index's weight and QQQ followed suit. But in the span of less than a year, the stock's weight in the ETF has increased by more than 50%. The iShares Morningstar Large Growth Index Fund (NYSE: <a class="ticker" href="/stock/jke#NYSE">JKE</a>) had a 12% allocation to Apple just a few days before Christmas 2011. Now JKE's Apple exposure is north of 16%.

As has been noted time and time again by any number of banks and analysts over the past few months, strip Apple out of the equation and EPS growth for the S&amp;P 500 in the first quarter is basically zero. Said another way, the entire market is vulnerable to even the slightest of Apple missteps, be it a disappointing batch of iPad sales figures, an extended delay of the next iPhone or problems with suppliers. 

Logically, the broader market's Apple vulnerability carries over to ETFs since it is demand for or selling pressure on an ETF's underlying components that drives the fund's price action. Freeze sees an even more viscous circle playing out while making a sound argument for equal-weight products.

"Should the expected pullback in the market occur, and investors sell out of QQQ and XLK, that will put oversized pressure on Apple itself, and a run of profit taking on Apple would then exert oversized pressure on QQQ and XLK and really hurt investors to a much greater level than ones invested in equal weighted products," according to Freeze.

Analyst Color

Global

iShare Morningstar Large Growth Index Fund

Apple And ETFs: Danger Ahead? (AAPL, QQQ, XLK)

By <a href="http://decisionpoint.com" target="_blank">Decision Point:</a>
<div>
We have added a new page of charts to help us monitor the relative strength of equal-weighted indexes against their capitalization-weighted counterparts. Cap-weighted index values are dominated by the larger-cap stocks in the index. For example, the 50 largest-cap stocks in the S&amp;P 500 represent about 70% of the index value. Conversely, the Rydex S&amp;P Equal Weight ETF (RSP) gives each of the 500 stocks equal weighting when calculating the index value. As a general rule, the equal-weighted indexes will outperform their cap-weighted counterparts because smaller-cap stocks dominate the index, but not always, so we want to monitor their performance so we know where we should put our money.
 
</div>
There are 11 equal weighted ETF, 10 of which are sponsored by Rydex. One of those 10 is RSP, mentioned above, and the other 9 are for the SPDR Sectors. Finally, there is the Nasdaq 100 Equal-Weighted Fund ETF (QQEW). The RSP chart below is an example of all the charts on the new page.
The Price Relative line is calculated by simply dividing the value of RSP by the SPY. When RSP is stronger, the price relative line rises, and it falls when SPY is stronger. Is this really such a big deal? Well, yes, it is. From the March 2009 low the SPY advanced 87% to the May 2010 top. RSP advanced 125% during the same period, which is 44% better performance.
<a href="http://blogs.decisionpoint.com/.a/6a0120a65d6eb8970b013485a4953b970c-pi"><img class="aligncenter" title="Chart" src="http://blogs.decisionpoint.com/.a/6a0120a65d6eb8970b013485a4953b970c-800wi" border="0" alt="Chart" /></a>
On the negative side, it appears that the equal-weighted indexes are often weaker during pullbacks and declines, but as a practical matter there are no hard and fast rules, and we need to constantly be aware of the relative performance of these two types of indexes.
Below are two charts comparing RSP and SPY over the long term. Note the peculiar behavior of RSP during the 1990s. This was when the stock market bubble was inflating, and money was concentrated in large-cap stocks. When the bear market started in 2000, we can see the sudden up turn in relative strength, and RSP didn’t hit its bull market top until a year after SPY.
<a href="http://blogs.decisionpoint.com/.a/6a0120a65d6eb8970b0133f2804190970b-pi"><img class="aligncenter" title="Chart" src="http://blogs.decisionpoint.com/.a/6a0120a65d6eb8970b0133f2804190970b-800wi" border="0" alt="Chart" /></a>
A final comment on performance, from the 2002 bear market low SPY advanced 107% to the 2007 top. RSP advanced 183% during the same period. Why hasn’t anyone noticed?
Bottom Line: There are 11 ETFs that feature equal weighted indexes, and we track and generate timing signals on all of them in our Decision Point Alert Daily Report. On market advances these equal weighted indexes normally outperform their cap-weighted counterparts, but shifts in relative strength do happen, so we have set up a page of special charts specifically to monitor relative strength on these indexes.
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First Trust NASDAQ-100 Equal Weighted Index Fund

Overview

First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ:QQEW), Quote.Headers.trade-ideas