To temper the volatility of Apple shares, Nasdaq officials will rebalance the Nasdaq-100 index in May. Apple stock, in its rapid growth, has started to weigh too heavily on the index. Nasdaq rebalancing cuts the ratio of Apple stock to the total value of the Nasdaq-100 by 50 percent. The artificial impact of Apple rumors set in motion be hedge funds to impact the entire index with the weight of Apple shares is likely to decrease, while investors who may have avoided Apple stock due to its volatility and outrageous price could really own some of it. Resource for this article – Nasdaq rebalancing reduces hedge fund manipulation of Apple stock by MoneyBlogNewz.
Percentage of Apple on Nasdaq to drop
An increase in Apple stock has also been a rise in the Nasdaq-100 in the last few years. Since the industry 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. Nasdaq officials spoke on Apple stock. In the index, it is twice what it should be. On May 2, Nasdaq will rebalance everything. This will make, on the Nasdaq-100, Apple shares only 12 percent. The adjustment to correct for Apple realigns the ratio for the company's stock and outstanding shares with the way the Nasdaq-100 is calculated. The change also lessens weighting for 81 many businesses. Some Apple rivals will gain. A Microsoft raise is expected. It should go from 3.4 percent to 8.3 percent total. Other increases are expected in companies. Intel will get to 4.2 percent, Google to 5.8 percent and Oracle to 6.7 percent.
Huge manipulation of industry with rumors about Apple
A lower ratio for Apple shares on the Nasdaq-100 should shield the stock from future manipulation by hedge fund traders suspected of shorting Apple and spreading rumors that send the entire Nasdaq-100 down. Recently, there was an instance where Apple stock swung in price because of Apple rumors, in accordance with Jason Schwartz at Seeking Alpha. There was a rumor that the iPad 2 would be postponed until June in February by hedge fund Yuanta Securities when Apple was trading at $360. The rumors spread very easily. Soon, Apple shares were shorted by Yuanta Securities to make money. Apple stock went down $20 just two days after trading. Shortly afterward, Steve Jobs, who was given six weeks to live by bloggers, declared that the iPad would go on sale March 10. Several investors felt like they lost on a simple rumor. At the same time, Yuanta made bank. The Nasdaq-100 was affected because of this.
Getting rid of the Apple rumor impact
The Nasdaq rebalancing doesn’t take effect until next month, however money managers are already rebalancing their holdings. A drop occurred on Tues in Apple stock during this. It brought on a $4.19 decrease from $337 to $341.19. There has already been less hedge fund able to use Apple to manipulate the market. The iPhone delay rumors are, more than likely, not true. It won't impact the stock though since it is already going back up and is $15 below its high. Apple is expected to do better than anticipated in first quarter earnings while investors and traders can trade Apple shares.
Articles cited
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
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