June 04, 2026

The stock market has seen a powerful advance since the March 30, 2026 price low, led by tech stocks generally and chip stocks more specifically.  Nvidia has been a big part of that, and with a 9% weighting in the Nasdaq 100 (NDX) it has helped to push that index up in a big way.  But now the two are diverging, and that is bad news.

Normally when we think of bearish divergences, they involve a big index and some weaker representation of the market like the Advance-Decline (A-D) Line.  The big idea is that if the indices look strong but weakness is starting to show up when we look more deeply, that is a sign of trouble.  The axiom that chartists like to use is "the generals outrunning the troops". 

This particular divergence is in a different category.  Nvidia is the largest market capitalization stock at $5.4 trillion.  And it leads other companies as an industrial powerhouse, making the chips everyone seems to want.  So it is an unusual way to see a bearish divergence versus prices.  This is not in the standard model of the index continuing higher while the weak stocks that cannot keep up start falling behind.  This is an out of shape general saying it is time for a pause.

If this current divergence were the only one, we might dismiss it as a momentary anomaly.  But we saw similar divergences in July 2024 and February 2025 that really did seem to matter.  So this latest one is perhaps worthy of our attention.

As always, a divergence is a "condition, not a signal".  Nothing says when a divergence has to start mattering.  And this divergence can get "rehabilitated" if we see NVDA's share price jump ahead to a higher high.  For now, though, it is a big concern.

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Tom McClellan
Editor, The McClellan Market Report
www.mcoscillator.com