Is the popular Tech ETF QQQ forming a head-and-shoulders topping pattern? The odds are low, yet it's possible.
What would it take to eliminate the fact that this pattern is sending a bearish message to the tech sector? A strong rally at (1) would blow up the likelihood that tech is topping.
Below looks at the NDX 100 Advance/Decline Line:
The NDX adv-dec line did not break below the February lows, while the NDX 100 index did. That created a short-term bullish divergence.
Recently the A-D line is breaking out to new all-time highs at (2), which sends a positive message to the tech sector.
With the A-D line breaking to new highs, a rally at (1) in the top chart would greatly reduce the odds that an important topping pattern is in play. Tech bulls should keep a very close eye on what this key sector does in the next couple of weeks.