TECH STOCKS CONTINUE TO LEAD MARKET HIGHER -- MOST OTHER SECTORS, HOWEVER, CONTINUE TO LAG BEHIND THE S&P 500 FOR THE YEAR

BIG TECH STOCKS LEAD MARKET HIGHER... The largest stocks in the technology sector saw big gains during the week.  That pushed the Invesco QQQ Trust to the highest level in more than a year as shown by the weekly bars in Chart 1.    Technology and Communication Services SPDRS were the week's strongest sectors and hit 52-week highs as well.   The XLK in particular was led higher by its three largest stocks shown below.  The weekly bars in Chart 2 show Apple touching the highest level in more than a year.      Chart 3 shows Microsoft doing the same.   Semiconductors were the strongest part of the technology sector.   Chart 4 shows Nvidia also hitting a 52-week high.   That's not much of a surprise considering that large technology stocks have been the strongest part of the market all year.   While tech stocks have been doing so well, however, the rest of the market has continued to lag behind.

WEAK MARKET BREADTH... Previous messages have shown various measures of market breadth lagging behind major stock indexes.  And that situation hasn't improved.   Which raises the question of how strong the stock market really is.   Chart 5 shows how narrow the rally has been this year.

NARROW LEADERSHIP... They say a picture is worth a thousand words.   So we'll finish with the picture in Chart 5 to show just how narrow this year's stock rally has been.   Chart 5 plots the eleven S&P sectors relative to the S&P 500 which is plotted as the flat zero line.   The boxes above the zero line show sector outperformance.   The boxes below the zero line show underperformance.   The sector names are shown along the bottom of the boxes.   The chart shows only communication services, technology, and consumer discretionary SPDRs outperforming the S&P 500 since the start of the year.    The chart, however, also shows the eight other sectors lagging behind the S&P 500.   So which boxes are we to believe.   Over the short run, strong technology and communication shares may be enough to keep the current rally going.   The fact that most other sectors are lagging behind the SPX, however, is probably keeping most investors in a more cautious mood.   That could change if more of the weaker sectors start showing some improvement.