Most stocks tend to move together but recent action in the tech sector versus small caps is remarkable: the NASDAQ
NDAQ
The evidence from the price charts is clear that the market as a whole has weakened much more than the closely followed tech and social media stocks. As representative of the overall economy, this divergence of the 2 sectors is worth studying. Generally, it would be a better look if the small caps fell at a less dramatic rate.
This is the daily price chart for the NASDAQ-100:
The popular index containing the big tech and social media stocks peaked in mid-July at 15800 and this week hit 14500, for a drop of 8.2%. The 50-day moving average (the blue line) has turned over and is heading down now but the index remains well above its 200-day moving average (the red line).
Compare this to the daily price chart for the iShares Russell 2000 ETF, right here:
This small cap benchmark peaked in late July at $198 and fell this week to just above $174. That’s droppage of 12% from the high to the low. Note that the 50-day moving average has clearly bent back downward and that the price is now trading below the 200-day moving average.
The weekly price chart for the NASDAQ-100 index is here:
The view from this longer-term shows a substantial rally from late last year to the present — but, so far, the tech-heavy index is unable to make it higher than those late 2021 highs. It’s a positive that both of the significant moving averages continue to trend upward.
Th weekly price chart for the iShares Russell 2000 ETF looks like this:
So, the small caps peaked in late 2021 and since then have not shown enough strength to take prices to even near that level again. The last 2 weeks of September have taken the benchmark to below both the 50-day moving average and the 200-day moving average, generally a bearish kind of sign.
The big tech and social media stocks get a lot of coverage in the financial media — it’s important to note that at least one less followed sector is not keeping up.
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