Jonathan Krinsky, BTIG’s chief market technician, notes that the Nasdaq-100, dominated by tech, hasn’t experienced a 2.5% or greater pullback in 303 trading sessions, marking it as the third-longest streak since 1990. While this streak doesn’t necessarily signal an imminent downturn in the AI-driven U.S. stock surge, Krinsky suggests that the market is due for some volatility.
Krinsky points out that the Invesco QQQ Trust Series ETF (QQQ), mirroring the Nasdaq-100, has hit 14 consecutive record highs in 2024, the latest on Friday, closing at $445.61 with a 1.5% increase. However, FactSet data indicates the last significant pullback of 2.5% or more was on Dec. 15, 2022, when QQQ dropped 3.4%.
Interestingly, despite Apple Inc.’s historical significance in the index, its current performance contrasts starkly. While Apple’s shares fell 9.1% year-to-date, the Nasdaq-100 climbed 8.3%, according to FactSet.
This divergence among megacap tech stocks, dubbed the Magnificent Seven, has been evident since 2024 began, with Monday’s trading session exemplifying the trend: Nvidia Corp. surged 3.6%, Tesla Inc. declined 7.2%, Alphabet Inc. dipped 2.8%, and Apple slipped 2.5%.
Krinsky emphasizes the importance of acknowledging the dispersion beneath the surface, suggesting that while it’s positive to witness a broadening beyond the ‘AI’ trade, the persistent momentum in certain names may lead to consequences, even if only short-term.
On Monday, weakness in several megacap names impacted the Nasdaq, causing both the Nasdaq-100 (NDX) and the Nasdaq Composite (COMP) to finish 0.4% lower. The S&P 500 also saw a slight decline after briefly turning positive, while the Dow Jones Industrial Average concluded the day in negative territory as well.
