Let's talk about the Invesco QQQ fund (QQQ) .
As you know, I was unimpressed with QQQs move in August, especially when Barron's decided to put technology on the cover during the final week of the month. And now we not only have this well-loved group trading back where it was in early July, we have a warning from Apple (AAPL) . With this stock, the largest component of the QQQs, at 11%, it is worth having another look.
That top in Apple measures to the low to mid-$130s. And the blue line comes in there, as well. For the time being I do not think that blue line gets breached.
It is obvious that $350 is support on the QQQs. I'd bet even a person who never looks at charts can see that level. On a pure chart basis, if that level breaks, there would then be a longer-term measured target down near $320. That's just if you are looking at the chart.
But as you know, I like to look at the indicators. I am still not a fan of big-cap technology, but it is hard for me to believe the QQQs can tumble an additional 10% and not drag everything else down with it.
I have been of the mind that what we are witnessing is the inverse of what we saw all summer. In the summer, breadth was negative most of the summer, but the big-cap tech stocks that move the indexes kept the indexes rising, despite such poor participation from everywhere else.
Now we have breadth improving and the mega-cap tech stocks taking the indexes down. The blue line on this chart is breadth and you can see that run upward in the summer saw the brown line (the S&P) surging ahead while the blue line lagged.
But look now: The blue line made a low in August and has been making higher lows ever since. That's the reverse effect.
Sometimes it is clearer to see it on the chart of the McClellan Summation Index, which smooths it out. You can see the downtrend in breadth beginning in June. The August low has been breached but in the last few days this indicator has been desperately trying to turn upward. At least for now it hasn't turned back down.
In the last few days the number of stocks making new lows has not expanded, either.
We already know that sentiment is pretty sour. It is not extreme, but it surely leans sour and is giving up gains into the close every day is not helping sentiment. We'll get to see the weekly surveys Wednesday and Thursday this week.
In the meantime, I must report that the Hi-Lo Indicator did not budge on Tuesday; it remains at .31 for Nasdaq. Perhaps the Apple news will get us moving from the slow leak we've been in. But at least the market internals are improving, while once again everyone is focused on the index moving names.