Editor's note: Market leadership is beginning to crack. The mega-cap technology and semiconductor stocks that have powered the current bull market are starting to roll over. And according to Greg Diamond, editor of our Ten Stock Trader newsletter, folks should get ready for more downside ahead...
When the Zweig Forecast and Professional Tape Reader newsletters launched in the 1980s, subscribers couldn't read them on a website.
They had to pick up the phone.
Financiers Martin Zweig and Stan Weinstein would record their latest market findings. And investors would call in on Friday afternoons to listen to the tapes.
These were the early days of technical analysis. While technology has come a long way since then, some of Zweig and Weinstein's insights live on...
The two men would often say, "Be nervous when the Generals are marching forward and the [rest of the] troops aren't following."
A slightly different situation has played out recently in technology and semiconductors... The "Generals" have been faltering, and the "troops" have been following them down.
A number of tech and semiconductor Generals – the mega-cap leaders in these sectors – have topped out in recent weeks.
That's not the kind of leadership we want to see. But we can't force the market to do what we want. We need to accept what it gives us.
Today, I'll cover what's happening... and what's likely to come next.
Tech and Chip Leaders Are Showing Cracks
Let's start by looking "under the hood" and examining the tech Generals. We'll begin with Apple (AAPL)...
Apple peaked in December 2025. It then failed to make a new high by early February – an important time factor that indicated the stock likely already topped out.
We've seen similar price action recently... The stock bounced again, made an even lower high on February 25, and is now dropping. This is another example of the topping-out process.
We're seeing the same type of setup in Microsoft (MSFT)... Amazon (AMZN)... and Alphabet (GOOGL). These tech Generals didn't peak at the same time. But they're all going through the topping-out process.
The industrials sector is one notable exception... The State Street Industrial Select Sector SPDR Fund (XLI) is holding up well compared with everything else we're looking at.
But historically, when leadership cracks, strength elsewhere doesn't last long. So, if tech continues lower, the question becomes: Do industrials roll over next? It's possible.
Now, let's shift gears to the semiconductor Generals...
We'll start by examining the biggest chipmaker of them all, Nvidia (NVDA)...
Nvidia released earnings after the market close on February 25... And the stock dropped the next trading day.
For technical traders, the reasons for the move aren't as important as the move itself.
As you can see, the stock is dangerously close to breaking its "support" level (the red line in the chart). If that happens, Nvidia could drag down the broader chip space.
That includes the VanEck Semiconductor Fund (SMH)... and major holdings Taiwan Semiconductor Manufacturing (TSM) and Advanced Micro Devices (AMD). Both of these semiconductor Generals have already been trending lower.
Watching for the Market's Next Move
Today, the market's leadership – technology and semiconductors – is beginning to top out.
But as traders, we can take advantage of the volatility. These chart setups can help us read what's happening... and trade intelligently.
Both sectors could see a breakdown, a potential bounce, and then an even bigger breakdown...
Or this could be a short-term low where the market looks past any volatility. After that, we could see choppier price action.
The bottom line is, if key support levels start to break, that would likely confirm a top.
Until we see that, patience is key. Let the Generals tell us what happens next.
Good investing,
Greg Diamond, CMT
Editor's note: Greg is a famed forecaster who has called several major market turns in recent years. Now, he says he has identified the exact week the market will hit a top in 2026 – before a decline that could make last year's "Liberation Day" look like a minor pullback. On Tuesday, March 10, he'll reveal how he's using a controversial 118-year-old trading strategy to help investors prepare for what lies ahead.
Further Reading
"Buying today [is] about as risky as it gets for this otherwise boring group," Brett Eversole writes. With this sector hitting new highs, prices are rising and valuations are stretched. That's why investors should avoid this low-growth sector that rarely rewards buyers.
"Market swings are nothing more than the graphic representation of human behavior," Greg writes. That's the focus of technical analysis. It's all about understanding when markets will move based on history. And it keeps us focused on making and preserving wealth.
