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We are either up against a ceiling, perhaps, or maybe bearing the weight of negative breadth on MNQZ26? Is it one, or the other, or both?
This video runs 13:16, but is timestamped below. To give you a quick perspective on the charts, watch this video:
Timestamp:
0:00 Monthly Chart Analysis
6:50 Weekly Chart Analysis
8:53 Daily Chart Analysis
This is the bullish target analysis based on the monthly chart:
We do seem destined to battle 31397.75 for a potential bullish breakout, and we could see it as early as Monday, depending upon how traders line up. If you watch the video, things seem to remain bullish, but certain parts of volume momentum analysis still questions how eager buyers are to push this index above that resistance level.
Bad (Negative) Breadth in the QQQs?
If you’ve tracked activity in the $SPX recently, one can see that market breadth has been rather shallow in terms of participation, as only the largest cap participants have been doing well, while the the other 75% of stocks in that index languish.
What about the QQQ?
QQQ (NASDAQ 100) breadth is negative on the 50-day measure, but clearly stronger in relative terms than the S&P 500.
Current readings (Oct 2 close)
I pulled this chart from Grok, but you can find links to this data below the chart:
The bottom line is that even as breadth has deteriorated in the QQQs, it is more of a 50-50 proposition than for the $SPX. The $SPX which holds most of its growth in tech, has seen the other industry sectors in that index fall into bearish territory over this past year. If you want the full link to this data, you can find it here. There is also a discussion of the McClellan Oscillator and the Summation Index, which are also negative.
This source lines up closely with these services, listed below:
MacroMicro: Nasdaq-100 stocks above 50- and 200-day averages and series page Nasdaq-100 above 50-day.
Stock Market Watch QQQ internals: QQQ market breadth.
Barchart percentage-above-MA table: Page: Stock market and sector performance.
breadth.app (delayed Oct 2 close): Page: Nasdaq-100 market breadth.
The important thing to understand is that there has been a deterioration in full-blown bullish price action in the NASDAQ 100 (and thus MNQ) in the last three months. Summer often causes a slowdown in trading action. The long fight of traders over interest rate policy and perhaps debates about data center expansion and energy requirements for AI expansion have lead to the sloppy price discovery path. Retests of previous resistance at or near 31397.75 have gone on all summer.
But what about earnings growth? Will massive debt be covered by the earnings of the hyperscalers as they continue the data center build-out?
That is a great and very pivotal question.
I do not subscribe to Real Investment Advice, nor do I promote any product this outfit sells, but this presenter’s logic is sound, up to a point. Listen to this video.
Right now, earnings seem to be great for some if not all the hyperscalers (with the possible exception of Oracle Systems (ORCL). ORCL is not really as impactful to the QQQ as it is the $SPX. The earnings for companies like META and AMZN (Amazon), look pretty solid, as long as the LLMs follow the same path for which token prices stabilize that the the buildout of data centers follow the feverish pace they are today.
What did I just mean by “up to a point”? Two factors come into play:
Debt: These companies are taking on a horrendous amount of debt to complete these buildouts. What is not yet known is whether some if perhaps not a majority of these companies cannot cover the cost of the debt to scale. If earnings growth rates are strong, it could happen, but not immediately. The one hyperscaler that is in hock (in debt) up to his big fat grin is Larry Ellison of ORCL. He is the most exposed to debt and in come ways has borrowed the entire enterprise, assuming success.
Open-source models: There are literally (using my best redneck technical terms from my glossary) crap-tons of opens-source models that can be installed on small servers and even PCs that don’t really need data centers to run. Alibaba, Kimi (Moonshot AI),Tencent (among other Chinese models) are among them. Meta, OpenAI, Thinking Machines, Nvidia, among many others, reside in the USA. These could limit the need for ubiquitous data center expansion, but it likely will not eliminate the large demand for compute. I won’t go farther in my personal commentary here, but any government-created monopoly by the large scalers might prevent the expansion of open source, and that would be destructive to human ingenuity and progress. It’s those fringe areas where new ideas come from. My political leanings are closest to conservative leave-me-the (word that rhymes with truck)-alone-ian-ism. I think letting free markets expand gives the greatest possibility for innovation. Serfdom under some corporatist or authoritarian regime will only stagnate over time, in my view.
I am working on one open-source project right now. I won’t comment on it yet as I have no idea if it will work, but if it does, I will let you know about it.
If you want to read the discussion I had with Grok about this, read it here, and expand it on your own if you like. If you want to hear the discussion with the MIT professor who thinks the data center mania is not necessary, listen to this podcast.
Summary
It looks to me that the QQQs, and thus MNQZ26 could be at a crossroad. Anything from interest rates, failure of tech earnings projections for AI expansion (which makes up the balance of what keeps this index close to all-time highs) will likely be deciding factors as we head into Q4 2026 and into 2027. Mid-term elections could also affect things too. Regardless of that, if we break through price resistances and earnings do not fail, the QQQs and MNQZ26 can forge higher, even with all the crazy Federal fiscal and monetary conditions. If Treasury bond rates get extreme and M2 is forced to expand even more than today, then we have bigger problems ahead. Don’t get me started on what President Trump said about inflating the debt away. I will deal with that at another time. Monday will give us some indication of what is ahead.
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