Charting the Markets: Nasdaq 100 Is Still Where the Power Lies
An incredible run from the start of the year seems destined to keep going.
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As we look at the power movers in the market there is no mistaking it's in the Invesco Nasdaq 100 QQQ, which is where the Magnificent Seven are "housed." Look at names such as Nvidia NVDA, Microsoft MSFT, Apple AAPL and Tesla TSLA, just to name a few. These high-quality companies have been leading markets for the past 18 months and even with a modest dip in late 2023, the QQQ has roared higher.
Following a year when the index gained some 53%, the QQQ has followed up the first half of 2024 with an equally impressive 21% gain. And yes, those gains were paced by the big names in the index. We know this because the Nasdaq 100 equal-weighted index shares QQQE are only up by about 6%, far less than the QQQ. That is because the QQQE is more balanced and gives each company one "vote" in the valuation of the index; it is not dominated by the highest market-cap names. In other words, Apple gets the same weighting as ServiceNow NOW. It paints a much different picture.
Yet all that said, the index return is phenomenal. The chart reflects the strength and power and from our vantage point there seems no stopping this freight train. The candles in the top pane have been blue (strongly bullish) nearly the entire year and stretching back to the October 2023 breakout. That is dominance.
Moving Average Convergence Divergence (MACD) remains on a buy signal, and stochastics (momentum) remains bullish and embedded (which means dip buyers are active here.
Maybe a dip buy opportunity will happen, but as we have seen thus far in 2024, those are few and far between.
