Advanced Forex Blog

A Deep Dive Into The NASDAQ-100

August 6, 2019 | 4:56 am | Advanced Forex Blog
August 6, 2019 | 4:56 am
Advanced Forex Blog
nasdaq

The NASDAQ-100 – What is it, how exactly does it work, and how can you apply it to forex?

Let’s start with the basics. 

Founded in 1971 by the National Association of Security Dealers (NASD), NASDAQ began its life as an acronym for the National Association of Securities Dealers Automated Quotations. At the time of its creation, it was the first and only electronic market, though at the time it only provided quotations and did not facilitate trading. Gradually the market expanded to include trade and volume reporting as well as automatic trading. 

In addition to being the first electronic market, NASDAQ would eventually become the first market to trade online, which in turn attracted more and more large companies. This technological prowess is also partly credited with modernizing the IPO.

Today, the NASDAQ is the second-largest stock market in the world, trailing only the New York Stock Exchange in market capitalization. The market is also not limited to companies that have their headquarters in the United States, a distinction which sets it apart from several other US markets. It currently has a market cap in excess of $10 trillion. 

How Does it Work?

Pay attention, this might get a bit confusing. 

In order to calculate the composite index of the market, Nasdaq uses a market capitalization weighting method. Also known as a market-value-weighted index, this means that the market’s components are weighted according to the total market value of their shares. Since individual stock prices change daily, this, in turn, changes the stock index’s value. The index value is reported once per second with the day’s final value checking in at 4:16 pm each trading day. 

In the case of NASDAQ, the index’s value is calculated as such:

The total value of the share weights of each of the constituent securities x  each security’s last price.

This total is then divided by an index divisor which brings the number to an appropriate figure for reporting. 

Which Companies Are in the NASDAQ-100?

Technology makes up the largest segment of the market, coming in at roughly 46.40% of the market. Next, are consumer services which comprise 20.16% of the market. Health care is next at 10.86% followed by financials at 8.59%, industrials at 6.32%, consumer goods at 5.49%, oil and gas at 0.71%, telecommunications at 0.70%, basis materials at 0.47%, and utilities at 0.30%.

The Full list of companies and their component’s weight is down below this article.

Why the NASDAQ Matters for Forex Traders

You might have noticed in the title of this article that there are two components. While the overall market value is derived from the composite, the NASDAQ-100 is a selection of the top valued companies within the NASDAQ, ranked by market capitalization. 

While the index is comprised of NASDAQ listed companies, it excludes financials and is heavily weighted towards the tech sector (seen earlier in the breakdown of market share across industries). This weight towards tech leads many investors to look at the index as a proxy for the more volatile, speculative shares. Members of the list include Apple, Microsoft, and Alphabet (Google’s parent company).

Because a large part of the index is technology and therefore export-driven, with factories and warehouses overseas, the index is not typically relied upon to give a wholly accurate look at the US economy. Rather, the NASDAQ can be used to see a larger picture in which investors can gauge risk appetite. The market tends to come up short in times of economic uncertainty, playing the role of a reverse safe-haven for investors. 

Trading the NASDAQ-100 Index 

The NASDAQ Composite is a leading financial indicator. Where analysts tend to use the NASDAQ as a benchmark, others are likely to invest in it depending on which market you have access to. The NASDAQ-100 composite is available for investment by various financial vehicles. The CME, for example, offers the E-Mini NASDAQ NQ as a future contact, There are few financial agencies who have issued NASDAQ Composite ETF (Exchange-Traded Funds). The most simplistic way to trade a forward feed of the NASDAQ is by trading its CFD (contract for difference)  variation, which is usually available with most retail forex brokers.


NASDAQ 100 Index – Full List of Companies and Weight

Company Symbol Weight
Microsoft Corp MSFT 11.431
Apple Inc AAPL 10.229
Amazon.com Inc AMZN 9.783
Facebook Inc FB 4.995
Alphabet Inc GOOG 4.566
Alphabet Inc GOOGL 4.012
Cisco Systems Inc CSCO 2.757
Intel Corp INTC 2.635
Comcast Corp CMCSA 2.336
PepsiCo Inc PEP 2.168
Adobe Inc ADBE 1.733
Netflix Inc NFLX 1.686
PayPal Holdings Inc PYPL 1.522
Costco Wholesale Corp COST 1.45
Starbucks Corp SBUX 1.399
Texas Instruments Inc TXN 1.382
Amgen Inc AMGN 1.381
Broadcom Inc AVGO 1.333
NVIDIA Corp NVDA 1.187
QUALCOMM Inc QCOM 1.046
Charter Communications Inc CHTR 1.039
Gilead Sciences Inc GILD 0.999
Booking Holdings Inc BKNG 0.966
Mondelez International Inc MDLZ 0.936
Automatic Data Processing Inc ADP 0.865
Intuit Inc INTU 0.861
T-Mobile US Inc TMUS 0.803
Celgene Corp CELG 0.801
Intuitive Surgical Inc ISRG 0.717
CSX Corp CSX 0.657
Walgreens Boots Alliance Inc WBA 0.594
Micron Technology Inc MU 0.59
Biogen Inc BIIB 0.568
Vertex Pharmaceuticals Inc VRTX 0.553
Marriott International Inc/MD MAR 0.548
Applied Materials Inc AMAT 0.538
Illumina Inc ILMN 0.529
Analog Devices Inc ADI 0.504
Tesla Inc TSLA 0.502
Fiserv Inc FISV 0.495
Kraft Heinz Co/The KHC 0.475
Ross Stores Inc ROST 0.46
Activision Blizzard Inc ATVI 0.454
Cognizant Technology Solutions Corp CTSH 0.437
eBay Inc EBAY 0.428
Monster Beverage Corp MNST 0.41
NXP Semiconductors NV NXPI 0.399
Regeneron Pharmaceuticals Inc REGN 0.398
Autodesk Inc ADSK 0.393
Advanced Micro Devices Inc AMD 0.385
Workday Inc WDAY 0.384
Xcel Energy Inc XEL 0.372
Lam Research Corp LRCX 0.37
MercadoLibre Inc MELI 0.367
Paychex Inc PAYX 0.365
Baidu Inc ADR BIDU 0.363
Sirius XM Holdings Inc SIRI 0.353
O’Reilly Automotive Inc ORLY 0.35
Xilinx Inc XLNX 0.338
Electronic Arts Inc EA 0.334
Cintas Corp CTAS 0.327
JD.com Inc ADR JD 0.313
Willis Towers Watson PLC WLTW 0.305
Alexion Pharmaceuticals Inc ALXN 0.305
Verisk Analytics Inc VRSK 0.303
VeriSign Inc VRSN 0.302
United Airlines Holdings Inc UAL 0.285
PACCAR Inc PCAR 0.282
Cerner Corp CERN 0.279
IDEXX Laboratories Inc IDXX 0.279
Dollar Tree Inc DLTR 0.278
Lululemon Athletica Inc LULU 0.266
KLA Corp KLAC 0.26
Microchip Technology Inc MCHP 0.253
Cadence Design Systems Inc CDNS 0.242
Ulta Beauty Inc ULTA 0.238
Synopsys Inc SNPS 0.234
Incyte Corp INCY 0.216
Ctrip.com International Ltd ADR CTRP 0.215
Expedia Group Inc EXPE 0.212
Check Point Software Technologies Ltd CHKP 0.206
Fastenal Co FAST 0.205
ASML Holding NV ASML 0.195
NetEase Inc ADR NTES 0.194
Western Digital Corp WDC 0.193
Align Technology Inc ALGN 0.193
Maxim Integrated Products Inc MXIM 0.184
Hasbro Inc HAS 0.173
BioMarin Pharmaceutical Inc BMRN 0.169
Take-Two Interactive Software Inc TTWO 0.166
Skyworks Solutions Inc SWKS 0.166
Liberty Global PLC LBTYK 0.163
American Airlines Group Inc AAL 0.158
Symantec Corp SYMC 0.158
Wynn Resorts Ltd WYNN 0.156
Fox Corp FOXA 0.153
Citrix Systems Inc CTXS 0.149
NetApp Inc NTAP 0.138
JB Hunt Transport Services Inc JBHT 0.134
Mylan NV MYL 0.124
Henry Schein Inc HSIC 0.119
Fox Corp FOX 0.116
Liberty Global PLC LBTYA 0.066

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