Tech stocks have been on shaking ground over the past several weeks / few months.
And this shows up clearly in today’s ratio chart, pitting the Nasdaq Composite versus the S&P 500 Index on a “monthly” basis.
This long-term chart really gets at the heart of the Nasdaq’s performance versus the broader market… and because it’s a “monthly” chart, it really highlights the macro trend.
As you can see, the Nasdaq’s out-performance propelled it to touch its 2000 highs before pulling back. The recent underperformance has seen the Nasdaq slide to a key trend-line support area.
Bulls want this area to hold and spur another rally attempt higher. Until broken this is a strong support level and odds favor that it will hold.
But if this price support breaks down, then look for tech stocks to under-perform as the ratio heads to the lower end of its up-trend channel. Stay tuned!