Divergences in Tech - The One Chart You Need to Watch
Market volatility remains elevated, with semiconductors continuing to drive the major swings we are witnessing.
This highlights the ongoing internal divergence within the technology sector: while semiconductors lead the decline, the Magnificent Seven have acted as a buffer, holding the $NASDAQ 100(NDX)$ and $Technology Select Sector SPDR Fund(XLK)$ from falling with more conviction.
The Semiconductor Struggle
$Micron Technology(MU)$ continues to slide, down -21% this month and -28% from its June peak (when I highlighted the elevated risk of chasing the after earnings euphoria).
As I have noted in recent weeks, this is a classic correction following overextension, similar to past patterns in Gold, Silver, $Palantir Technologies Inc.(PLTR)$ $Microsoft(MSFT)$ (2025), and $Netflix(NFLX)$ (2025). Interestingly, while $VanEck Semiconductor ETF(SMH)$ fell -1.6%, $Advanced Micro Devices(AMD)$ -3.5%, and $Taiwan Semiconductor Manufacturing(TSM)$ -3.4% this week, $NVIDIA(NVDA)$ closed flat (+0.3%), remaining resilient amidst the sector storm.
The Tech Divergence
Today, the Magnificent Seven were mostly bullish, preventing a broader tech decline. $Apple(AAPL)$ (+4%), $Microsoft(MSFT)$ (+2.8%), $Amazon.com(AMZN)$ (+3%), $Alphabet(GOOG)$ (+3.6%), and $Meta Platforms, Inc.(META)$ (+3.1%) all outperformed, with $Tesla Motors(TSLA)$ the only outlier (-0.4%).
Trading Recap & Strategy
Yesterday, I provided a tactical hint on how to anticipate premarket ‘traps’ that vanish at the open. That setup played out perfectly today for the $S&P 500(.SPX)$ and $Invesco QQQ(QQQ)$ .
People who set the timeframe and indicator I mentioned yesterday sow a live example of the likely reversal, and if using the daily levels anticipated yesterday for today, the navigation of the retrace was smooth until the price reached our Central Daily Level (CDL), where the market reversed.
Today, the SPX 7,538 level acted as precise support at noon, while the 7,562 level served as our bullish recovery target.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
