the sharp rally in Tech's biggest names spurring the NASDAQ to rebalance its NASDAQ 100 index that's set to go into effect later this month Jared blickery is here with a closer look so dread I guess break down how exactly this works and what it means for the market you bet it's called a special rebalance and I'm going to get to that in a second I just want to show the outside outperformance of the Magnificent Magnificent Seven as many are calling them this is year-to-date Nvidia now up 200 percent met up 150 percent we've seen these numbers so I want to focus on what's happening with the NASDAQ now a week from this Friday they are going to make something called a special rebalancing and this is triggered when the aggregate weight of companies that each have more than four and a half percent weight in the index that total weight tops 48 so when we have those big companies like Nvidia Apple Tesla that are making up a substantial part they get too concentrated and we've been talking about this for a while there are automatic rules in the NASDAQ that have it rebalanced and this is to avoid an SC see conflict to be in conflict with SEC rules so Wells Fargo has done some of the work and by the way this happened in 2011 there was too too much concentration back then and what they discovered was in the 10 days leading up to that rebalance uh the winners were actually the stocks that were going to be upsized and the losers were those that were going to be downsized and so that's kind of intuitive back then guess what Apple had to be downsized it was too big very similar to this time around but the other names not as familiar Qualcomm Starbucks Altera Baidu list goes on even Bed Bath and Beyond back then was too big to actually be included in the index at full weight Microsoft had to be upsized so did alphabet or and so I think that's pretty interesting because both of those are getting downsized now but nevertheless when you take a look at what's happening over the last few days this is a year excuse me the yeah I was showing the year to date first I'm going to show you what happened over the last three days in the index you can see not as much of an outperformance here you see Nvidia meta up three percent six percent Amazon up one percent but we do see some losers there compare that to some of those names that Wells Fargo is going to be upsize and you see a lot more outperformance here so in the intervening three days since we got this announcement it was after the Bell on Friday definitely seeing some interest in these stocks now this is only a short-term Punt and there's no guarantees that this will continue there's also no guarantees that these will be the exact stocks this is only a guess by Wells Fargo as to what's going to happen we'll find out that after the Bell on Friday but again leading into July 24th which is a Monday we're probably going to see some more interest in these stocks and a little bit less in these all things being equal guys this is trying to bet on the next big winner all right Jared blickery thanks
