An equal-weighted portfolio of Apple, Microsoft, and Nvidia shows a high correlation with the Nasdaq 100 Index and the ETF that tracks it. The correlation ranges from 84 to 99, meaning their performance tends to mirror each other closely. These three stocks constitute 24% of the tech index’s influence, impacting its movements.
Late 2024 into early 2025 brought a noticeable divergence between this portfolio and QQQ, indicating potential price decreases. Despite a lower close on Wednesday, the shrinking candle size suggests a slowing downward velocity. With the Volatility Index nearing a sub-30 level, a bullish rebound may occur if the response to Netflix’s quarterly report is positive.
Shifts In Investment Strategies
A method comparing the S&P 500 and Utilities sector ETF reflects a shift towards safer investments. Such risk-off behaviour aligns with declining prices and a bear market onset. As early April unfolded, indications suggested pausing active investments, with further declines possible.
Gold’s price volatility follows its own pattern, acting as a hedge against uncertainty. Volatility typically rises at market tops and falls at bottoms. The ATR for State Street Gold Trust currently fails to mark new highs or lows, suggesting ongoing price movement is incomplete.
This article examines how certain well-known tech stocks—when combined in equal weight—track closely with a broader tech-focused index. Because these companies make up nearly a quarter of that index, their moves effectively drive its daily and weekly fluctuations. During much of the past year, this tracking held well within a tight band, rarely falling outside a 15-point spread in correlation. We can be reasonably confident, then, that watching these three names gives us a solid proxy for the broader Nasdaq 100 performance.
Things began to shift around the close of 2024, with gaps forming between the direct portfolio and the well-known ETF that shadows the index. We’ve observed this kind of break previously when directional bias begins to slip. It’s not always immediate, but often this type of divergence—which can reach four or five percentage points in a week—preludes a period of reduced buying strength.
Candle Structures And Market Momentum
In the most recent sessions, candle structures on daily charts are inching smaller, which we read as waning momentum. Sellers are still present, but the speed of the descent isn’t accelerating. This slowing could form a base, especially if upcoming earnings from certain mega-cap names land well with the market. Futures positioning combined with increasingly complacent volatility readings, particularly from the VIX, nudges us to prepare for a short-term bounce scenario.
Meanwhile, the classic defence play—the Utilities sector—continues to hold relative strength versus the broader S&P 500. This rotation to perceived stability rarely happens without reason. Looking at it from our side, it often reflects concerns about upcoming liquidity constraints or macro instability that hasn’t been priced into riskier names yet. Such a shift doesn’t suggest panic, but it does flag caution. For shorter-term traders, reducing broad exposure or slicing speculative bets might reduce drawdown during these more defensive cycles.
Since breaking the $2,000 mark, gold has become more reactive to forward inflation expectations than central bank commentary. Notably, average true range (ATR) readings for the largest gold ETF, while elevated, haven’t escalated in tandem with highs. That tells us directional conviction is soft and the move, whether up or down, hasn’t fully shaken out yet. We’re still seeing uneven volume and staggered demand. Because gold tends to pre-empt late cycle fear, its mixed volatility could hint at unresolved macro themes ahead.
In this context, planning timing becomes more valuable. Trade entries must be filtered with that in mind—wider stops may be required if implied vol holds steady, and fewer reversals should be expected in individual names while indexes remain sensitive to earnings data drips.
As for taking directional positions in equities, it’s becoming a market where being early carries greater risk than being slightly late. Patience, while often undervalued, is now a direct contributor to positive expectancy. We’re tracking sentiment more closely than usual and expect high-beta sectors to exaggerate moves off any new macro data print.
