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If you own one of the market's biggest technology names are follow (or trade) NASDAQ-based instruments like the NASDAQ 100 Trust ETF (QQQ), brace yourself for some serious action on Monday, July 24th. The index is going to undergo some serious rebalancing then. The move will take the biggest toll on the seven biggest NASDAQ-listed companies. Conversely, it may prove a bit beneficial for every other NASDAQ-listed name.

The rebalancing is meant to reduce the influence and impact that Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Tesla (TSLA), Google parent Alphabet (GOOGL), Meta Platforms (META) and Amazon.com (AMZN) have on the index. These tech giants have become even more gigantic in recent months (while other NASDAQ-listed names haven't), meaning these seven tickers -- sometimes referred to as "The Magnificent Seven" -- now make up too much of the index's value. As of the most recent look these companies account for 60% of the index's total value, and even though the NASDAQ 100 is meant to be a cap-weighted index, the exchange fears there's too much imbalance to ignore. Doing nothing would defeat the purpose of an index in the first place.

And the move poses some risk to the seven stocks in question, even if only temporarily.

See, several funds and ETFs mirror the NASDAQ 100 Index as it stands now. If the exchange opts to reduce the proportion of the index by lowering the share of the index these seven stocks have on it, that means these funds must reduce their stakes on these stocks. That means selling them. Selling en masse drives prices down.

It's not the end of the world. The selling will take place all in one highly eventful, highly volatile, high-volume day. After Monday it will all be over, driving these tickers down to only about 40% of the NASDAQ 100's value. After that, the index may not be able to dish out the scope of gains it has been (presuming this stocks remain poised to continue outperforming the broad market).

On the other hand, for the same reason these seven tech giants became oversized in the first place, they may well do so again. It's easier to get bigger when you're already huge.

It's not the first time such a rebalancing has been made. The last time we saw it happen was in May of 2011, when the market was coming out of the subprime-mortgage-meltdown funk, led by tech stocks. We also saw it in late 1998. This one is a little bit different than past rebalancing though, in that no stocks will be added or subtracted. The biggest ones will simply be reduced in terms of their net impact. The new goal is to not let any company account for more than 4.4% of the index's value.

Of course, the exchange can't prevent a company from exceeding that threshold. A stock's going to rise or fall however it's going to rise or fall. Cap-weighted
indexes adjust themselves accordingly.

Whatever the case, just know things are going to get raucous on the 24th of this month.

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