Tech stocks continue to lead the market higher, with the NASDAQ Composite and Nasdaq 100 recording intra-day all-time highs. But something isn’t right beneath the surface.
And it could be a rally killer. I emphasize “could.”
The 12-year bull market has been lead by tech stocks. And for the past 15 years, tech stocks have been lead higher by large-cap tech stocks.
What does that mean?
The Nasdaq 100 Index has outperformed the broader Nasdaq Composite. You can see this in today’s long-term “monthly” ratio chart.
This ratio has been in an up-trend marked by (1) for 15 years. But the ratio has reversed lower and is suddenly testing its rising support line and year 2000 closing highs – also at (1). And it’s happening when everything “feels” right in the market.
Bulls will get a bearish signal if this trendline breaks in the months ahead, so stay tuned.
Until then, strong support is support until broken, which is bullish for tech stocks and the broad markets.