The Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE:QQQE) can give great signals. For example, it peaked one month before the NASDAQ-100 did.
There is a good reason for this.
The NASDAQ 100 is a market-weighted index. This means the bigger companies have more influence than the smaller ones do. For example, Apple Inc (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) alone are about 23% of the index.
This QQQE peaked before the NASDAQ because all the companies in the index have the same weightings.
When the market started to fall apart in November, money flowed into safe stocks like MSFT and AAPL. The large weightings of these two stocks masked the weakness in other parts of the market. But the weakness in QQQE was an early sign the market was going to peak in December.
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