The bull continues and the S&P 500 index takes out new all time high levels, almost on a daily basis. Everything seems great and the charts look great but here is one aspect of the market that is starting to disturb us a little lately. The NASDAQ ETF (QQQ US) refuses to be the leader and it is actually trading slightly below the recent all time high levels.

In order for the break out higher in S&P to feel valid, we would like to see the NASDAQ trade above recent highs (red line). Should NASDAQ turn lower here, we risk getting a lower top which would be a sign of weakness.

There are few sustainable rallies that have taken place with NASDAQ lagging relatively speaking. The chart below shows the QQQ (white), IWM (yellow, Russell) and SPY (orange), all in percentage terms.

Since July the relative leader is SPY. This is not an alarm the market is about to correct, but we would like to point out that NASDAQ needs to trade better relatively speaking in order for us to feel comfortable with the overall rally.

Technology has traded relatively muted and we see giants such as Apple and Amazon continue taking a breather. The chart below is showing performance of Apple (orange), Amazon (white), FB (yellow) and SPY (purple). Probably not a huge deal for now as we have seen normal retracements in Apple and Amazon (Fb is another story), but we need the tech giants to take the lead in order for a healthy rally to continue.

Source: charts by Bloomberg