You all know that I'm waiting for this next major new downleg in the QQQQ (Nasdaq 100) which will come sooner rather than later ! Using the semiconductors as a leading indicator for the whole technology universe works usually quite well ! As you can see in the chart below the major top made in the QQQQ's in late October of 2007 you can clearly how there was as disconnect between QQQQ and SMH. While QQQQ rallied to new highs from (A') to (B'), SMH did make only a lower high from (A) to (B) ... look what happened next : A huge reversal on the downside in the QQQQ's in the next two years. What i find interesting is the fact that we are starting to experience the same sequence recently. The QQQQ's are on the verge of making a higher high from (C') to (D') while SMH is laging behind with a lower high from (C) to (D) ! All this to say that when SMH starts to underperform QQQQ and that QQQQ breaks out to new highs while SMH doesn't, you get a huge major downside reversal in the QQQQ afterwards ! Looks like this is another ingredient that confirms my (C' ) sequence for the next two to three years in Nasdaq as seen in this chart (Click Here) !
