Tech Inflection Point:

The old saying goes “capital flows to where it is treated best”. Is this why trend following is such a successful strategy? Things in motion, in the stock market as in life, tend to stay that way, more likely than they are to reverse. Holding winners is key to accumulating wealth, and yes it may be true that fewer names have been guiding this tech rally higher, but until the last couple days the number of stocks hitting 52 week highs came from a diverse amount of areas. They include ATVI HAIN PZZA GIS BMRN and NEM. However all in all technology has been the place to be, and the ratio chart below shows the performance of the Nasdaq compared to the S&P 500. And it will make the most sense to play the leaders in technology against the laggards within the S&P 500, as stock pickers will continue to thrive in this environment. If there are fewer and fewer names participating to the upside, your watchlist narrows, and it makes finding leadership a bit easier. Remember concentration builds wealth, and diversification preserves it. The Nasdaq is now well below the promising cup with handle breakout pivot of 8957 taken out just days ago. It needs to make a stand here in the coming days.

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