At a weighting of nearly 15%, more than double the second largest component (MSFT) and 4x that of the third largest component (GOOG), AAPL's strong rally today is largely driving the advance of the $NDX. Even if we don't back out AAPL's 2.5% gain but simply give it an equal weighting against the other stocks in the $NDX, we can see that today's gain in the equal-weighted NDX ($NDX-E) is over 28% lower than that of the AAPL top-heavy $NDX. While the 1% gain in the $NDX-E is still respectable, today's rally in the $NDX-E, as well as the other major US stock indices, so far appears to be nothing more than a continuation of the short-term oversold bounce off the support level that was highlight on Friday afternoon.
Of course, this over-weighting thing cuts both ways. AAPL is scheduled to report earnings next Monday, April 27th, after the market close. We also have a slew of tech giants reporting this week, including IBM, FB, YHOO, MSFT, GOOG, and AMZN. Bottom line: Either strap in & hold on or considering reducing market exposure if you aren't a big fan of volatility and large opening gaps as the choppy price action that we've seen recently isn't likely to abate anytime soon. High volatility can be very frustrating for swing traders as it tends to provide numerous whipsaw buy & sell signals in addition to running the stops of both longs & shorts alike.