The Mega Caps Are Struggling

The lows for the index were put in on January 24th, and we continue to make higher lows coming out of the base. I must admit it is a rather tentative market for the large cap leadership tech names.


Let’s start with Alphabet, GOOGL. It pulled back from a breakout to new highs and sits on support currently. There does not appear to be an upward bias after the pullback yet, but it is still trading on above average volume. This leadership stock is trapped between the 20 and 100 DMA lines.


Amazon also delivered a great earnings report, but it has levelled off. Some progress in the last five days has the stock stalled at the downtrend line as well as horizontal resistance shown in black. Volume is still bigger for the week than the range in November and December. It is stuck between the moving averages. The earnings pop was a welcome reprieve, but the leadership element is still lacking.


Apple is also stalling here. No real progress in two weeks and stuck below the lower high in January. It is above both moving average lines so that is bullish. This is one of the best stocks on the leadership team, but two weeks without progress is a problem.



Looking in on Microsoft, the chart also has hurdles to overcome. The price action is oscillating around the 20 DMA but it is holding below the 100 DMA. For a leadership stock, it\’s not leading as it struggles below the support / resistance line. This leadership name is stuck below this resistance level for a month already.


Meta continues to be a disaster. It is trying to stabilize after the largest single day market cap loss in history. Will it ever join the leadership team again? Too early to say as the trends in the old business are outweighing the trends in the new business.


That leaves the golden child Tesla. The stock is in a messy situation. Stuck below both moving averages, Tesla hasn\’t been able to make any progress above the support/resistance line. There is still a trend of lower lows in place and the stock trades in a tight range for the last two weeks.

When I look across the group, I am not inspired that this market is ready to go higher, as these leadership names make up 50% of the Nasdaq 100. When these stocks wobble as a package, it makes me worry that they are being sold here, not bought.

Keep stops tight so if this unravels, you are protected.
Good trading,
Greg Schnell, CMT, MFTA