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Are Large-Cap Tech Stocks In Big Trouble?

ByChris Kimble
Published 02/23/2021, 03:45 PM
Updated 07/09/2023, 06:31 AM

For much of the past decade, large-cap tech stocks have been a real bull market leader. Investors have gobbled up shares of the likes of Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Netflix (NASDAQ:NFLX) and Microsoft (NASDAQ:MSFT) to name a few.

But those large-cap tech names have come under pressure over the past six months. And more recently, over the past few weeks.

This is all evident in today’s chart depicting the ratio of the cap weight Nasdaq 100 ETF Invesco QQQ Trust (NASDAQ:QQQ) to the Equal Weight Nasdaq 100 ETF First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ:QQEW).

As you can see, this ratio has been in a rising price channel marked by each (1). But over the past year, the QQQ/QQEW ratio has formed a “head-and-shoulders” topping pattern. The latest price action has the ratio testing a confluence of critical support at (2) – the neckline of the H&S pattern as well its rising trendline.

A break of support at (2) would be bearish for this market leader and would suggest that large-cap tech stocks will outperform the average tech stock. Stay tuned.

Latest comments

Doesn't your argument support the opposite conclusion, that if support is breached large-cap tech stocks will UNDERPERFORM?
Maybe u missed the Fed’s speech today as thats the only reason you would right this. You are litterally one day behind. Tomorrow I expect to see you do a 180 after tech flies. Bottom hit today - thats what you should be writting about not this wrong direction bs
Watch the real time performance of the QQQ's. Only heavy intervention (manipulation) prevented a collapse about 1 pm today.
futures are down
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