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The Nasdaq 100 Index is still trading near its all-time high, but relative weakness in leading stocks may be hinting at a possible tech correction around the corner. Here’s our simple and quick analysis to help you prepare for the market’s next move.

The Nasdaq Composite, Nasdaq 100, and S&P 500 indices remain near their highs, but recent price action “under the hood” may be cause for concern.

Out of the roughly 120 leadership stocks on our daily watchlist, 41 stocks were down 3% or more yesterday (July 14).

Leadership has narrowed to just a few big cap tech stocks pushing higher, which is not a positive sign for the current rally.

The daily chart below shows the Nasdaq Composite on top, and the percentage of stocks trading above their 40-day moving averages on the bottom section:

The percentage of stocks trading above their 40-day moving averages (~35%) is near a level that we normally associate with a significant pullback in the market–BUT the Nasdaq is at its high.

That’s quite a bit of (bearish) divergence!