Over the past several months, growth stocks have begun to fall behind value stocks. And this theme can easily be seen in the growth-oriented Nasdaq Composite.
Technology stocks have been a market leader for much of the past two decades. But this trend/theme appears to be coming to an inflection point.
And this backdrop brings us to today’s chart, which highlights the S&P 500 Index versus the Nasdaq Composite via performance ratio. And with tech being a long-term leader, you can see that the broad S&P 500 index has been lagging the Nasdaq over the past several years – see downward trend marked by (1).
BUT, as we mentioned above, tech stocks have been lagging over the past several months. And we can see how the broad S&P 500 Index has been out-performing the tech-dominated Nasdaq Composite of late. In fact, it appears to have formed an inverse head and shoulders pattern while rallying up to the trend resistance line at (1).
Looks like a big test for tech is coming up… if resistance holds, it’s great for tech. If not, rut ruh!
(Click on image to enlarge)
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