Nasdaq 100 major adjustment! Is the opportunity here?

Views 1337Dec 11, 2024

最近各市場都在波動，包括美股、港股、中國資產、加密貨幣，一會兒上一會兒下的，挺值得一說的。改天再專門講講中國資產的事，今天先說美股。為了方便理解，先貼一下今天這篇內容的核心要點：

● 美股下週減息概率大；近期有信號提示了美股的交易窗口期；美股方面還需關注12月13日 $NASDAQ 100 Index(.NDX.US)$ 的成分股調整

● 講解納指100是什麼，成分股的入選資格、入選流程、加權方式，以及指數什麼情況下會調整等基礎信息

● 講解成分股調整會帶來什麼影響，這次調整中需要關注什麼，包括個股、ETF及期權策略

● 從長期投資價值的視角，分析納指100的歷史走勢、估值水平、投資策略等

美股目前關注什麼？

下週馬上迎來12月的議息會議，根據CME FedWatch截至12月10日的數據，85.8%的概率認為12月利率將降至4.25%-4.50%，這與目前的4.50%-4.75%相比，下調了25個基點，減息的概率還是很大的。

(Screenshot from the CME official website)

In the recently released US November non-farm payroll data, although the growth in employment exceeded expectations, the unemployment rate also increased, thereby increasing the expectations of a rate cut in December. Next, let's look at the CPI data on Wednesday night. If the inflation data does not unexpectedly rise, the possibility of a rate cut next week is still high. However, if the CPI data shows a significant monthly increase again, it may weaken the likelihood of a rate cut.

Open Futubull > Market > US Stocks >Financial Calendar/Featured Macro DataStay updated on important data in a timely manner and seize the investment opportunity!

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Another point is about Sir Niu.It was also mentioned last week.The market reaction before the inauguration of the president, the trading effect of the year-end market, coupled with the fluctuation signals of VIX, these signals may indicate a window of opportunity for trading in the US stock market. Although the current market sentiment is more bullish, there are also institutions warning of the timing to short the US dollar. So everyone should pay attention to relevant risks and be more flexible in their strategies.

Against this backdrop, what is the recent focus of the US stock market? Reminder: December 13th $NASDAQ 100 Index(.NDX.US)$ will usher in the annual component stock adjustment.

Below, Sir Niu will break down this event, explain the underlying logic, and share relevant strategies.

Adjustments are coming, unveiling the secrets of the Nasdaq 100 quickly.

Let me give you a brief introduction first. $NASDAQ 100 Index(.NDX.US)$ about this index.

1. What is the NASDAQ 100 Index? This index roughly tracks the 100 largest non-financial companies listed on the Nasdaq Exchange (including both domestic and international). The component stocks cover industries such as Technology, Retail, Medical and Health. Because it includes many high-tech companies (such as the seven tech giants of the US market), the market also sees it as an indicator of tech stocks.

2. Which securities qualify for inclusion?

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3. How are component stocks selected? How are they weighted?

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4. When does this index undergo weight adjustments? What other adjustments are made?

● Quarterly updates: These are adjustments at the company level, conducted in March, June, and September each year. Adjustments are required if a company exceeds either of the following conditions: the weight of a single company does not exceed 24%; the combined total weight of companies with weights exceeding 4.5% does not exceed 48%.

● Annual updates: These are adjustments at the security level (meaning one company may have multiple securities, but only one security is adjusted), conducted in December each year. Adjustments are made if a security exceeds either of the following conditions: the initial weight of a single security does not exceed 15%; the total weight of the top 5 securities with the highest weights does not exceed 40%.

Adjustments to various related dates can be viewed in the figure below:

(Screenshot from the Nasdaq official website)

● There are also some special adjustments where a security is disqualified and removed, typically after a notification is issued. In the event of removal, a replacement security is required to be included, selected based on the largest market capitalization as of the end of the previous month, meeting all criteria, and not currently a constituent stock.

What impact does the Nasdaq 100 adjustment have? What should be paid attention to in this adjustment?

What effects does the annual adjustment of constituent stocks bring?

Newly selected companies may attract attention and experience an increase in stock price due to portfolio rebalancing by fund and ETF managers, while companies that are removed may face short-term stock price pressure; there may also be changes in the industry distribution, valuation levels, and volatility of the entire index.

What can investors do?

Investors can pay attention to companies that may be included or excluded, evaluate the investability of potential inclusion candidates, and handle excluded companies with caution.

Investors can track the performance of Nasdaq 100 related ETFs during adjustments in the short term, look for arbitrage opportunities, or hedge risks in their own positions; evaluate the investment value after index adjustments in the long term, or re-evaluate and adjust their asset allocation strategy based on the new market and industry trends reflected in the index adjustments.

Returning to this adjustment, the following summarizes the companies that may join or exit.

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Among these, the most discussed is$Palantir(PLTR.US)$ 、 $MicroStrategy(MSTR.US)$ 、 $Coinbase(COIN.US)$These are some popular stocks that may be included. In terms of inclusion possibilities, Palantir > MSTR > Coinbase.

Although both MSTR and Coinbase meet the market capitalization requirements, they are relatively lower in ranking, and whether these two belong to non-financial companies is still debatable. As for Palantir, it is one of the high-flying stocks this year. At the end of last month, it transferred its stock listing from the New York Stock Exchange to Nasdaq, and the market speculates it is related to the inclusion in Nasdaq.

Let's briefly discuss the fundamentals of these companies.

$Palantir(PLTR.US)$ It does big data analysis, providing services to governments and enterprises. Its revenue growth is relatively strong, but it has not achieved sustained profitability yet. The advantage lies in the potential development opportunities brought by big data and AI. The risk point is the relatively high reliance on government contracts, uncertain profitability, and the current high valuation level.

$MicroStrategy(MSTR.US)$ This company specializes in enterprise software, with poor revenue and profit performance. In recent years, its main strategy has been to hold Bitcoin, which has become the company's main asset. The key feature of this company is that the rise in Bitcoin may enhance the company's value, but it overly depends on Bitcoin price fluctuations. Its original software business grows slowly, it carries relatively high debt, and regulatory risks cannot be ruled out.

$Coinbase(COIN.US)$ As a well-known compliant cryptocurrency trading platform, it is a leading platform for cryptocurrencies, with a huge user base and high brand awareness. The benefit is the possibility of becoming a beneficiary of mainstreaming cryptocurrencies. However, the risk lies in its high reliance on cryptocurrency market volatility, unstable profitability, and regulatory and competitive risks.

From a fundamental perspective, the business stability and growth potential of Palantir and Coinbase surpass that of MicroStrategy. When it comes to cryptocurrencies, the relevance of MicroStrategy is the highest, but Coinbase is more stable than it.

If these hot stocks are included in the Nasdaq 100, then tracking ETFs such as Those tracking the Nasdaq 100 like $Invesco QQQ Trust(QQQ.US)$ 、 $Invesco NASDAQ 100 ETF(QQQM.US)$ 、 $ProShares UltraPro QQQ ETF(TQQQ.US)$ 、 $Direxion Shares Etf Trust Nasdaq-100 Equal Weighted Index Shares(QQQE.US)$ 、 $First Trust Nasdaq-100 Equal Weighted Index Fund(QQEW.US)$ And $Global X Nasdaq 100 Covered Call ETF(QYLD.US)$ There may also be significant fluctuations. Because these ETFs need to purchase relevant stocks before December 20th to track the latest NDX.

Below is a comparison of these ETFs

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If you want to profit from these fluctuations in the short term, besides trading the ETFs themselves, a common practice is to trade their related options strategies. For example, consider Long Call for bullish views, Long Put for bearish views, and strategies like Straddle and Strangle for uncertain directions. For more information, you can learn from "Intermediate Options Strategies".Advanced Options Strategies。

In the long run, will NASDAQ 100 continue to rise?

Let's first take a look at the trend of NASDAQ 100 over the past few decades.

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You can see this trend line, especially in recent years, showing a very steep trend.

On the first trading day of 1990, the index was only 223.84. By the closing of December 10, 2024, the index value had become 21368.18, a significant increase of over 95 times, with an annualized return rate of 13.18%! Over these 35 years, there were only 7 years of decline (20% of the time).

There were some obvious declines in between. What exactly happened? The main reasons were two-fold: major risk events such as geopolitical tensions, financial market emergencies, and the Federal Reserve's tightening monetary policy.

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Although there were some major declines in some years, in the longer term, the NASDAQ 100 has shown strong resilience. After all, most of its components are still supported by fundamentals and performance. Additionally, adjustments to the components are made each year, and the technology industry typically exhibits a strong 'Matthew Effect', so theoretically, most of the newly added components should be decent.

Now let's talk about the valuation. Data as of December 5 from Wind shows that the PE ratio of NASDAQ 100 is 37.72, at the 95.39th percentile historically. Compared to other indices such as S&P 500, Hang Seng Index, and CSI 300 Index, this value is significantly higher.

Screenshot from Wind

However, from the perspective of growth, there may still be room for valuation to rise. You can consider another valuation indicator that takes into account future growth - forward PE, which is calculated by current stock price / estimated future earnings per share (usually for the next 12 months).

As of December 10, the forward PE of Nasdaq 100 is 26.83, which is not considered too high from a historical perspective.

Screenshot from macromicro official website

So, Mr. Bull sums it up: From the fundamental and growth perspective, the Nasdaq 100 may still have resilience and room for growth. However, it does not rule out some risk events, tightening policies, and other factors that may have a negative impact, leading to a significant short-term pullback. In one sentence, that would be don't be afraid, but don't go all-in.

So the best way is to do RSP, currently ETFs such as QQQ for the Nasdaq 100 support monthly installment plans. Check the specific operation and advantages of monthly installments in the figure below:

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Alright, that's all for today regarding the content of the US stocks and the Nasdaq 100. If you have plans to invest in US stocks recently, why not start by clicking here and claiming rewards!click here, to claim rewards!