NDX Stocks Are Leaving The Party

News on tariff exemptions for certain tech companies helped lift the Nasdaq 100 Index (NDX) to a new all-time high on Aug. 7, 2025.  That index is currently 11% above its own 100-day simple moving average, which is pretty far up there. 

But this is happening with only some of the component stocks pulling their weight.  Apple, Microsoft, and Nvidia are doing fine, but this week's chart shows that a declining number of NDX component stocks are above their own 100-day MAs.  That number peaked at 84 stocks above their 100MAs back on July 24, and now just 2 weeks later it is down to just 63 stocks. 

This is a big and rapid divergence between the index and this measure of NDX component breadth.  Divergences like this have been seen before at important price tops.  A couple of those are shown in the chart above.

Now, the problem with any divergence is that it will never tell you anything about when it is going to decide to matter.  A divergence can carry on for a long time before prices finally respond.  And in some cases, a divergence can be "rehabilitated", which invalidates the bearish message.  Those factors have to be contemplated any time a chartist notices a divergence. 

This current one, though, is a different type of divergence.  The change in the number of NDX stocks which are in uptrends (by this measure) has made a very rapid drop, which the index is barely reflecting.  That is an indication that liquidity is drying up, so that the weaker stocks start suffering while the big caps hog all of the available money to keep their own party going.  Because the bigger stocks matter more for the calculation of the index, the suffering of the smaller components goes unnoticed in the index.  But it does tend to matter, eventually, when the drying up of liquidity comes around to bite the big ones too.