Chart of the Day - Wednesday, December 9th, 2020

Today’s Chart of the Day was shared in a note by Frank Cappelleri of Instinet (@FrankCappelleri). On the left is the Nasdaq 100 equal weight index over the past six months, and on the right is the Nasdaq 100 over the same period. The Nasdaq 100 is heavily weighted towards a handful of Mega-Cap names. The top 5 stocks within the Nasdaq ($AAPL, $MSFT, $AMZN, $TSLA, and $FB) represent a whopping 40% of the index. As we know Mega-Caps have lagged recently and only one of those five stocks is currently trading above its September high ($TSLA). Frank points out that the equal weight Nasdaq 100 broke out over a month ago while the Nasdaq broke out just last week. In the note, Frank explained, "While that connotes that a greater amount of names now are stretched, it also shows how strong the participation has been." Broad participation is certainly constructive. But now that we've gotten that, Mega-Cap heavyweights will need to wake up in order to propel this breakout higher.