Since mid-2023, the gap has steadily widened - it doesn’t mean an immediate reversal, but it does mean QQQ is very top-heavy (the NDX/NDXE ratio tends to oscillate in bands; rather than, trend infinitely higher)
Current leadership concentration favors short-term bullish momentum (45%), but the rally is fragile, if mega-caps falter, the downside could open quickly (30%)
1. FAANG + NVDA/TSLA Leadership Persists
2. Pause & Rotation (25%)
3. Breadth Divergence Resolves Lower (30%)
The ratio at 2.88 is stretched relative to historical balance
- Strong NDX vs weak NDXE suggests a fragile rally
- If mega-caps stumble, the whole index could pull back hard
- However, if breadth improves (NDXE starts outperforming), that would strengthen the rally base
Current leadership concentration favors short-term bullish momentum (45%), but the rally is fragile, if mega-caps falter, the downside could open quickly (30%)
1. FAANG + NVDA/TSLA Leadership Persists
- Ratio keeps rising (NDX > NDXE)
- Leaders continue to attract flows (AI, cloud, semis).
- QQQ pushes to new highs with narrower breadth
- Rally vulnerable if just one or two leaders stumble (NVDA, AAPL, etc.)
- +5–10% upside near term if momentum holds
2. Pause & Rotation (25%)
- Ratio stalls near highs
- Equal-weight (NDXE) starts to catch up
- Breadth improves modestly, but QQQ as a whole chops sideways
- QQQ consolidates in a 5%–7% band
3. Breadth Divergence Resolves Lower (30%)
- Concentration risk unwinds
- Leaders mean-revert (profit-taking, earnings disappointments)
- NDX underperforms NDXE, ratio falls from highs
- QQQ could correct −10% or more
The ratio at 2.88 is stretched relative to historical balance
- A “reasonable” medium-term range would be closer to 2.3–2.5 (15% to 25% on percentage scale)
- Implies QQQ pause/correction while NDXE holds steady or outperforms, or broadening participation (small/mid Nasdaq catching up)
I am not a licensed professional & these posts are for informational purposes only, not financial advice
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
I am not a licensed professional & these posts are for informational purposes only, not financial advice
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.