The Nasdaq 100 includes the 100 largest non-financial companies listed on the Nasdaq Stock Market. From etf.com the latest information on sector breakdown is 56.7% technology, 20.5% consumer cyclicals, 13.6% healthcare, 4.4% consumer non-cyclical and 3.6% industrials with a few other small pieces.
Tech heavy for sure, but a good amount of diversification. This makes for a very interesting quandary. You see, 56.7% is a large allocation to technology. But that leaves 43.3% that is not technology related. However, this 43.3% of non-tech stocks seems to have had no impact over the last 8 months.
The chart above shows the ETF for the Nasdaq 100 (PowerShares QQQ (NASDAQ:QQQ)) with the Philadelphia Semiconductor Index (Philadelphia Semiconductor Index) as the area chart behind it. Quite a tight fit huh?
No need to guess at how close the Nasdaq is following the SOX. The lower panel shows the correlation coefficient. It has been between 70 and 100% nearly the entire period. The lowest point was only 60%. And look how often the correlation has been above 90%. This is a crazy tight correlation given the explosiveness of the healthcare sector. Want to know where the QQQ is going? Watch the SOX.
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