Dow Leads, Nasdaq Lags: $NVDA, $QQQ, and $SPY Signal Divergence
Despite the relief rally on Friday that saw the $Dow Jones(.DJI)$ achieve a historic close above 50,000, the technology sector remains under intense scrutiny as it faces an uphill battle to reverse its recent underperformance.
This divergence serves as a significant warning for the broader market, particularly as the “AI trade” shifts from euphoria to an era of massive capital expenditures.
$Amazon.com(AMZN)$ ’s staggering forecast of at least $200 billion in infrastructure spending for 2026, a $50 billion overshoot of analyst expectations, has intensified concerns that aggressive investments by hyperscalers like $Alphabet(GOOG)$ $Alphabet(GOOGL)$ and $Meta Platforms, Inc.(META)$ may outpace immediate returns.
While $NVIDIA(NVDA)$ led a single-session surge of 8%, the $NASDAQ(.IXIC)$ ’s struggle to reclaim its 20-day moving average suggests that Tech still has considerable work to do to shift its technical structure. With labor market data cooling and industrial giants like $Stellantis NV(STLA)$ scaling back EV initiatives at a massive cost, the market is signaling that capital discipline is now as vital as growth.
Until these tech leaders can prove that their record-breaking Capex cycles will translate into bottom-line results, the persistent drag on the $NASDAQ 100(NDX)$ remains a critical risk that the high-flying Dow and $S&P 500(.SPX)$ cannot ignore forever.
Alpha Over Beta: Finding Winners While the Indices Chop
Last week, our High-Probability Setups outperformed in a very volatile week, maintaining a cumulative accuracy record of 79%.
The moves in BTC, $Berkshire Hathaway(BRK.B)$ $VanEck Semiconductor ETF(SMH)$ $Wal-Mart(WMT)$ $Apple(AAPL)$ $Invesco QQQ(QQQ)$ $SPDR S&P 500 ETF Trust(SPY)$ $JPMorgan Chase(JPM)$, were anticipated correctly, even for $iShares Russell 2000 ETF(IWM)$ in a very choppy week, securing an average gain of 5% across bullish and bearish setups.
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