The relentless surge of Big Tech stocks continues to drive the broader equity market to new highs. Notably, the Invesco QQQ, an ETF tracking the tech-heavy Nasdaq-100 index, has recorded a remarkable year-to-date increase of over 10%, reaching a new record high of 445.61 on Friday.

Interestingly, this ascent of the QQQ is primarily attributed to a select few Big Tech companies, particularly the emerging AI chipmaker NVIDIA Corporation (NASDAQ:NVDA). In contrast, both Apple Inc (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA) stocks have underperformed, experiencing declines of more than 9% and 24%, respectively, since the beginning of 2024.

The AAPL/QQQ Divergence:

Examining this divergence, a BTIG technical analyst has observed a significant difference between AAPL and QQQ. The tech giant's Relative Strength Index (RSI) is unusually low compared to QQQ, a situation not seen since Volmageddon in 2018 – a major market event marked by an unexpected and extreme volatility spike.

The analyst pointed out, "Apple (AAPL, Not Rated) daily RSI is at 27 while QQQ daily RSI is at 66. Since QQQ's inception in 1999, there has never been a day when AAPL's RSI was below 30 while QQQ's RSI was above 65, like it is now." The only other instance, with slightly relaxed parameters, occurred on Jan 29th-31st, 2018, just before 'volmageddon.'

Does the AAPL/QQQ Divergence Signal Another Volmageddon-like Downturn?

The BTIG analyst does not believe so. While acknowledging the potential for increased market volatility or correction, they assess that the current financial and economic indicators do not align with those preceding the extreme volatility of Volmageddon.

Despite various signals resembling patterns from previous market events, the analyst notes, "None of these have led to any sort of pullback on the indices." However, they caution that the dispersion beneath the surface should not be ignored, indicating potential short-term ramifications.

Why is AAPL Stock Underperforming the QQQ?

BTIG analysts believe the discrepancy between Apple stock and QQQ "is likely to resolve," possibly through an upturn in AAPL's value or a downturn in QQQ's. 

While recent challenges have affected Apple stock, including lagging domestic sales, poor Vision Pro reviews, and regulatory headwinds in China, the company's unfavorable position in the AI boom may also be a contributing factor. This has possibly led investors to reallocate funds towards leading AI companies like NVDA and Microsoft Corporation (NASDAQ:MSFT), which have been primary drivers of QQQ's record-breaking rise.

Paraphrasing text from "Investing" all rights reserved by the original author.