NVDA Is Showing Relative Weakness vs SPY as the Ratio Line Breaks Down

 NVDA Is Flashing Relative Weakness Before Price Confirms

Above is a daily chart of NVDA, and in the lower pane is a ratio chart of NVDA versus the SPY. I rely heavily on ratio charts because they tell me how a stock is behaving relative to the market, not just in isolation. Right now, that message from NVDA is hard to ignore.

The ratio line is clearly sloping downward, which tells me NVDA is lagging the broader market. While the SPY has been holding up, NVDA has been quietly underperforming. This kind of relative weakness often shows up before the price chart breaks down  and that’s exactly what we’re seeing here.

Relative Weakness Is Leading Price

What really stands out to me is how weak the ratio line has become. NVDA price is still above its pivot low from 12 days ago, but the ratio line is not. In fact, the ratio has already broken below that prior low and gone on to make a five-month low. That’s important.

When a ratio line makes a new low before price does, it tells me that institutions are rotating elsewhere. Money is leaving NVDA relative to the SPY even though price hasn’t fully reflected it yet. This is a classic example of relative weakness leading price, not lagging it.

Why Ratio Line Correlation Matters

When I use ratio charts, I want to see a clean relationship between price and the ratio line. If the stock goes up, I want the ratio line moving up. If the stock goes down, the ratio line should move down as well.

If a ratio line chops sideways or moves randomly while price trends, I don’t find it useful. In my opinion, a ratio that doesn’t correlate well with price has little analytical value. That’s not the case here with NVDA, the correlation is excellent. The stock’s struggles are being confirmed by a weakening ratio line. That gives me confidence that this relative weakness is real and not just noise.

NVDA Isn’t Broken — But It’s on Watch

At this point, I’m not short NVDA. I’m simply watching it closely. Price is still holding above support, including the pivot low from roughly two weeks ago. As long as that level holds, NVDA can continue chopping around.

However, if NVDA breaks below the 169.55 low from two weeks ago, that would get my attention. A breakdown in price, combined with a ratio line already making multi-month lows, would be a strong confirmation of downside risk  especially if the broader market is also heading lower.

Why I pay attention to Relative Strength

This is exactly why I focus so much on relative strength. Price alone doesn’t always tell the full story. The ratio chart often gives me an early warning when a stock is falling out of favor.

Right now, NVDA isn’t leading. It’s lagging  and the ratio line is making that crystal clear. Until that changes, I’m treating NVDA as a stock to watch carefully, not one to aggressively buy.

Press the Button, Mr. President… Our Portfolios Can’t Wait!

 

This isn’t just cartoon exaggeration, it mirrors the anticipation in the cannabis market right now. With speculation swirling around a possible rescheduling announcement coming Monday, traders are glued to every hint, rumor, and headline. Stocks like MSOS, TLRY, and CGC could see significant moves depending on the news.

Cannabis stocks are notoriously sensitive to political developments. Even the slightest policy shift can trigger explosive after-hours or pre-market activity. Traders aren’t just watching the news, they’re trying to predict the button press before it happens.

The cartoon captures this perfectly: the blend of humor, suspense, and just a little bit of market anxiety. While we can laugh at the image, the reality is that preparation matters. Knowing your positions, managing risk, and planning potential trades ahead of the announcement is crucial.

So as we wait for Monday, whether you’re a seasoned trader or just following the news, the lesson is clear: excitement is part of the game but discipline wins it.

Cannabis Sector Sees Explosive Volume Ahead of Potential Monday Catalyst

 

Friday marked a pivotal moment for cannabis stocks as anticipation builds around the potential announcement the sector has been waiting for. On Friday, speculation steadily increased when CNBC and several other major news outlets are now pointing to Monday as the likely day for a meaningful announcement, and traders clearly positioned themselves ahead of that possibility.

The surge in activity was unmistakable. MSOX posted record weekly volume, a clear sign that participation and interest spiked dramatically. TLRY and CGC also saw massive weekly volume with huge gains. This same pattern played out across much of the cannabis space, where the majority of weekly volume for many names occurred in a single session. When volume compresses into one day like that, it often signals urgency, either aggressive positioning or last minute repositioning ahead of a potential catalyst.

Whether the news ultimately meets expectations or not, the price and volume behavior itself is important. Sustained volume is often a prerequisite for meaningful trend changes, and the cannabis industry has been starved of positive momentum for years. After being held back by regulatory uncertainty for far too long, the sector may finally be approaching a major inflection point. With participation returning in force, the coming week could prove to be one of the most important periods cannabis stocks have seen in quite some time.

Nasdaq Warning Signs: QQQ Relative Weakness Builds Beneath the Surface

 

Above is a daily chart of QQQ, with a ratio chart of QQQ versus SPY in the lower pane, and together they are beginning to tell a subtle but important story. On the surface, QQQ appears relatively calm. Price has been consolidating, moving sideways and giving the impression of stability. However, when you look beneath the surface through the lens of relative strength, a different picture starts to emerge.

The QQQ/SPY ratio line has been showing early signs of weakness during this consolidation. About two weeks ago, the ratio broke its uptrend line and, notably, it has not been able to reclaim that level since. That failure matters. Relative strength trends often turn before price does, and prolonged inability to regain a broken uptrend can be an early warning that leadership is eroding. This makes the current consolidation in QQQ less comforting than it might initially appear.

What adds to this concern is the broader market context. While QQQ is chopping sideways and its relative strength is fading, IWM is pushing to new all-time highs. Small caps making fresh highs while the Nasdaq lags is a classic sign of rotation and potential weakness in former leaders. This divergence doesn’t guarantee immediate downside, but it does suggest that capital is flowing away from large-cap growth and into other areas of the market.

Looking at the internals of the Nasdaq reinforces this view. Many of the index’s most influential names are no longer acting like leaders. Stocks such as NVDA, AMZN, NFLX, AMD, MSFT, and META are not making new highs. In fact, several are beginning to roll over or break minor support levels. When heavyweight components start to lag together, it often precedes broader index-level weakness.

That said, spotting relative weakness does not automatically mean it’s time to short. Relative weakness is a condition, not a trigger. I prefer to let price confirm the thesis. That means waiting for clear support to break or for a pivot low to be taken out before getting involved. Right now, QQQ has not provided that confirmation, so there is no actionable entry.

A good example of this approach was NFLX. The stock showed relative weakness first, but I only acted once support was decisively broken. Until the market proves the case again, the game plan is simple: stay patient, remain objective, and continue to monitor price action closely. For now, I’m sitting tight and alert to the growing signs of weakness in the Nasdaq, but waiting for the market to make the next move.

You can read about my NFLX post from 10 days ago here:  NFLX: Relative Weakness You can't Ignore

Why MSOX Can’t Keep Up: The Hidden Decay Behind Leveraged Cannabis ETFs

 If you’ve ever compared a long-term chart of MSOS versus MSOX, you’ve probably noticed something strange, even when cannabis stocks rally hard like today, with MSOS touching its August 28th high MSOX still sits far below its old levels. The difference has nothing to do with the underlying cannabis stocks themselves. It’s baked into how leveraged ETFs work.

MSOX is a 2x leveraged ETF, meaning it aims to deliver twice the daily performance of MSOS. The keyword here is daily. It doesn’t track 2x the long-term performance it tracks 2x of the day-to-day moves. This distinction is what causes the decay over time.

Leveraged ETFs experience something called volatility decay or compounding drag. When the underlying index (in this case MSOS) chops around, even if it ends flat over a long period, the leveraged ETF often ends up lower. That’s because each percentage move occurs on a constantly changing base. For example, a 10% drop requires an 11.1% gain to recover. When you magnify those moves with leverage, the “climb back” becomes even harder.

In high-volatility sectors like cannabis, this effect is amplified. MSOX gets hit harder on down days, and on up days it has to work overtime just to catch back up. When the price action zig-zags which cannabis stocks are notorious for, MSOX bleeds value even while MSOS eventually stabilizes or recovers.

This is why today’s charts look so different. MSOS has rallied all the way back to its late August levels, but MSOX is nowhere close. The leveraged decay accumulated over weeks of volatility, making MSOX structurally unable to track the same long-term recovery.

The takeaway is simple: MSOS is built for holding. MSOX is built for short-term trading. Over time, the math always wins and leveraged ETFs almost always lose value relative to the underlying.