The Apple Inc. (NASDAQ:AAPL) Effect: XLK & QQQ
David Fry: Let me be one of a few thousand commenting on Apple Inc.’s (NASDAQ:AAPL) earnings as they affect primary technology ETFs where the weighting in the company is extraordinarily high. Depending on any given day where price action may dictate weightings the company’s weighting on the SPDR Technology Select Sector (NYSEARCA:XLK) and the Powershares Nasdaq 100 ETF (NASDAQ:QQQ) is somewhere between 15-18%. Therefore, anything positive or negative occurring with the stock will greatly dictate the performance of several technology weighted ETFs.
Apple shares had seen quite a bit of profit-taking over the past few weeks. This was occasioned in our opinion by too many people buying expensive short-term call options on the stock. Many of these options probably expired worthless on options expiration the previous Friday.
Technically, there was a significant DeMark weekly sequential 9 count registered as the stock had gotten substantially overbought. As is often the case such a reading, especially with the security in question being much overbought, can cause a reaction the other way. Such was the case with Apple shares. [Related: The Device That Could Send Apple Shares To $800]
Fundamentally, there were news items regarding ebook publishing disputes. Suggestions were also making the rounds that wireless carriers were showing a decline in new plan sign-ups perhaps negatively affecting sales of Apple products. Finally there were concerns the upcoming earnings report would show some disappointment. But based on the company’s report Tuesday night it appears all these concerns were misplaced and the stock roared higher on a blockbuster earnings report. [Related: How To Earn A 9.25% Gain In 30 Days While Waiting For Apple’s Dividend]
All things considered, it’s primarily a one stock market.
The ETF Digest is long XLK & QQQ.
David is founder and publisher of ETF Digest and best selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management published by Wiley Finance in 2008. In July of 2009, Fry was named in the ETF Hall of Fame as one of the Top 25 people who revolutionized the ETF industry and guided ETF investing from its conception to widespread acceptance among all breeds of investors. Fry founded the ETF Digest in 2001 and was among the very first to see the need for an online publication that provided individual investors and financial professionals with trading tools, market information and actionable advice on ETF investing. ETF Digest was recently ranked 9th in the Top 100 ETF websites from Alexa on exchange traded funds. Dave Fry has devoted over 35 years to the business of trading and portfolio management. He is registered as an arbitrator with the Financial Industry Regulatory Authority (FINRA) and the National Futures Association (NFA).