One of the most notable trends in the stock market this year has been the meteoric rise of mega-cap tech.
These companies have outperformed all other sectors of the equity market, and their dominance has become increasingly concentrated. Currently, the seven largest companies account for over 54% of the Nasdaq 100.
While this has been a hot topic for investors, there's always been a significant weighting of the top several companies in any index.
In reality, the top end of the stock market is unique in its ability to generate high earnings and market performance.
This is difficult to replicate with cheaper stocks, as they often lack the brand power, technology leadership, global reach, and management strength of the best-in-class leaders.
So, when the announcement was made about rebalancing the Nasdaq, I didn't expect much of a move. A special rebalance has only happened twice before, in 1998 and 2011. And the largest companies saw almost no impact.
In fact, in 2011, Apple Inc. (AAPL) made up more than 20% of the Nasdaq 100. But when it was rebalanced to a mere 12%, Wall Street analysts viewed this as an opportunity to buy on weakness.
But something else much more interesting happened on the other end of the spectrum.
That's when I immediately jumped on the phone with Garrett Baldwin. He was on his way down to FreedomFest, where he told me exactly why he's watching this event...
What You're Not Hearing About the Nasdaq
The mainstream media is agonizing nonstop about how top-heavy the market is.
And the story around the rebalance is focused solely on reducing the dominance of mega-cap tech... scaling back the weight of the "Magnificent 7."
But no one is talking about the benefit smaller companies will potentially see as their shares are lifted by an expanded presence in the index.
See, everyone already knows that Apple, Alphabet (GOOGL), Microsoft (MSFT), and others will be getting a haircut to their weighting. Yet there is no clear-cut list of who will benefit.
Investors are betting the smallest companies in the Nasdaq have the most to gain. And that's why Zoom Communications (ZM), Sirius XM (SIRI), and Enphase Energy (ENPH) saw their shares surge 10% in recent days while the Nasdaq is up less than 2%.
Even Wall Street's finest are making predictions...
Wells Fargo believes Starbucks (SBUX), Mondelez International (MDLZ), Booking Holdings (BKNG), Gilead Sciences (GILD), Intuitive Surgical (ISRG), Analog Devices (ADI), and Automatic Data Processing (ADP) are the winners from the "Great Rebalancing."
But I turned to the guy I trust the most... I hopped on the phone with Garrett, since he's a momentum-trading specialist, I wanted to know what his plan was.
He told me as soon as the market opens, he's digging through the official rebalance announcement... and that will dictate his trades as the opening bell rings. He's expecting heavy volume right from the get-go as index funds race to rebalance billions of dollars in holdings.
I immediately asked, "Where can I sign up and join you?"
Well, I am in luck and so are you...
Garrett's set to livestream his trades as the market opens at 9:30 AM ET. And you - and I - can join him right here.