This is a follow-up to my last post on tech (Oct 27th) in which I favored the mega tech names.
It is quite something to see the chart of the 3 biggest tech (and S&P 500) names look like this…
…while charts of ETFs dominated by smaller tech names (like ARKK) look like this…
All of this is no sudden surprise.
For many months now, leadership within tech got increasingly thin. One-by-one, small-cap leaders got knocked down until present-day where the leadership is dominated mostly by just a few large-caps.
This makes for some very interesting ratio charts.
First, QQQ is going parabolic relative to QQEW. And this is on a log-scale, mind you.
ARKK erased all of it’s 2020 outperformance over QQQ! However, this ratio is approaching a big level of support.
Finally, GOOGL may still be getting ready to breakout from a 13-year base relative to QQQ. I first shared this chart and liking for GOOGL back in late July.
I keep hearing on twitter that Apple and Microsoft are extended. Over the past 3 months, these 2 stocks are up 18% and 14%, respectively. They could certaintly pause, for sure.
However, other mega-caps could just be starting another leg higher. I already posted the GOOGL:QQQ chart above, but take a look at Amazon and Netflix.
NFLX is retesting a major base (similar to what AAPL did back in Oct). And AMZN is in a 16-month consolidation withn a strong uptrend. These 2 certainly are not extended.
The evidence to me says that mega-tech can continue to dominate over small-caps for some time to come.
Thanks for reading.
Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.