Growing Apple influence leads to Nasdaq rebalancing

The Nasdaq stock exchange declared Tues that it is rebalancing its Nasdaq-100 index next month to fix the outsized influence of Apple, Inc. The Nasdaq rebalancing decreases the weight of Apple stock on the total worth of the Nasdaq index by half. Nasdaq’s stirrings will shrink the propensity of financial institutions of the hedge fund type to cynically disrupt the natural rhythms of Apple stock so that average Joes can count on a more reasonable possibility of return on investment down the road.

Switching Apple to fix the Nasdaq

An increase in Apple stock has also been a rise in the Nasdaq-100 in the last few years. Since the market bottomed out in 2009, the Mac, iPhone and iPad have driven Apple shares skyward more than 250 percent. There has been another 150 percent increase more than the 20 percent of the Nasdaq-100 total value in Apple stock since then. According to Nasdaq officials, Apple stock has ballooned to more than twice the weight it should have on the index. On May 2, Nasdaq will rebalance anything. This will make, on the Nasdaq-100, Apple shares only 12 percent. Apple stock ratios will be better for calculations on the Nasdaq-100. All will be well. This is a large change. It will change 81 other business positions. Some Apple rivals will gain. There will be an increase from 3.4 percent to 8.3 percent for Microsoft. There may also be rises in Google to 5.8 percent, Intel to 4.2 percent and Oracle to 6.7 percent.

All the Apple rumors change things

Due to the lower Apple share ratio, the Nasdaq-100 will be protected. Any manipulation by hedge fund traders will be stopped. Recently, there was an instance where Apple stock swung in price due to Apple rumors, in accordance with Jason Schwartz at Seeking Alpha. Apple was trading at $360 in February. At this time, a rumor that iPad 2 releases would be postponed until June due to "supply chain contacts" came out by Yuanta Securities. The rumors spread very quickly. Soon, Apple shares were shorted by Yuanta Securities to make money. Apple stock went down $20 just 2 days after trading. There was then an announcement by Steve Jobs. He said that March 10 the iPad would go on sale. Yuanta made lots of money off of it although investors felt really dumb. However the chicanery impacted the worth of the entire Nasdaq-100.

Not an impression rumor left

It will be another month before the Nasdaq rebalancing occurs. Still, money managers are rebalancing what they have. Apple stock went down on Tues from $337 to $341.19 with a $4.19 drop. The ability of hedge funds to manipulate the industry using Apple already has been diminished. Analysts don’t expect the latest iPhone delay rumors (which would freeze the iPhone market and hurt Apple if they were true) to work because Apple stock remains about $15 below its high and is trending upward again. A window has been opened for average investors and traders to get into Apple shares and the company is expected to exceed expectations again when it reports first quarter earnings this month.

Citations

Fortune

tech.fortune.cnn.com/2011/04/05/a-good-day-to-buy-aapl/

Mac Observer

macobserver.com/tmo/article/nasdaq-100_to_cut_apples_index_share_nearly_in_half/

MSN Money

money.msn.com/market-news/default.aspx?feat=e52a3c86-3053-48e5-91eb-970765febdcc

Seeking Alpha

seekingalpha.com/article/260887-hedge-funds-bloggers-and-the-origin-of-apple-rumors