Growth participation is narrowing

Nick SchmidtAug 23, 2026

After an expectation breaker last week growth participation narrowed as semis, AI infrastructure and cybersecurity weakened, while materials, metals and healthcare took over leadership.

20D trend

QQQ

SPY

IWM

Overview

Going into last week we had semis and AI infra stocks start to join the rally and growth participation was broadening. Broadening growth is what you want to see because it creates a strong environment and much friendlier market, but Tuesday we had a big expectation breaker as those groups that looked like they were joining all cracked and faded where they should have held.

Throughout the week we saw that weakness start to trickle across growth and had cybersecurity fade aggressively too. Thats important because cybersecurity was one of the growth groups that led this most recent rally attempt. The charts in the cybersecurity leaders aren't "broken" yet but the action was ugly and makes some charts wide & loose which is not what I want to trade.

Software stocks are still holding up extremely well so some growth is working, but we ended the week with narrowing growth participation while materials, copper, metals, healthcare and biotech took over leadership. That is the total opposite of what we wanted to see and for now seems like toppy action as money rotates into more defensive groups.

The rotation doesn't mean growth is done and they can't repair so keeping open minded is important but as of right now it would be arguing with reality to say that growth is where the strong leading action has been.

Staying open minded is key

Overall the market has been difficult so we have to expect it to remain difficult and pull the unexpected.

Quick Growth ETF review

SMH

Only 13% of semis remain above the 10-week one of the weakest groups in the market. This may end up being a base before we go higher but for right now its weak and an avoid.

TCAI

AI infrastructure etf 10-week rejection and bearish engulfing.

IGV

Held its previous resistance so so far resistance to support flip and trading tight. Best acting group in growth and still looking constructive.

HACK

Cybersecurity isn't broken and is still being supported by the 10-week in an uptrend. Last week the group came under pressure so watching to see if we lose this growth group as well or it hangs on.

Quick non-growth ETF review

XLB

While semis for now struggle we have Materials breaking out of a 7 month base. This so far is clean strong action and could be the start of a new trend.

XLV

Healthcare strong new highs again has wind at its back here unlike AI stocks.

GDX

While the past 3 weeks I have wasted my time focused on semis, metals and miners have been extremely strong. More strong weekly follow through action we havent seen in growth themes.

Plan for this week

This week I’m focused on: Materials, Energy & Industrials Precious Metals Copper
If if expectations break again and growth acts better, I’ll shift focus to: Software

The clearest broad leadership right now is in non-growth, so I plan on keeping most attention early in the week in what is currently leading like healthcare, materials, metals. If growth/tech starts acting better and broadening out I will shift attention back but I'm currently only interested in Software.

The AI stocks have had big convincing moves so I wouldn't be suprised we see it again but the action is sloppy and difficult so it would need more time to get me interested again.

The market either way remains difficult so I am also fine staying patient.

I don't feel we are in an early uptrend anymore where I want to aggressively get positioned in new growth leaders, so I am in no rush to force anything.

Current Positions

SGOL

10%

Ideally next week it pushes and stays above the 30-week and lets the 4 week catch up and cross above.

Avg cost

$42.49

Last

$43.96

P&L

+3.46%

COPX

12%

I started a position as it got through its base resistance and it ended up closing highs of the week. Its approaching new highs, I took some profits but am giving the rest room to officially break out of this 8 month base and trend.

Avg cost

$89.22

Last

$94.59

P&L

+6.02%

Notable Charts

Themes in order of one-week RS.

Precious Metals

GDX vs QQQ4-wk RS+31.1%1-wk RS+17.1%

BVN

Focus

Organized push above down trend line - tight week - new weekly closing high. Looks actionable within this area.

NEM

One of the strongest in the group making a fresh closing high above prior resistance. Currently a leader in the group. Tightening up here around the pivot or a break above that pulls back and uses it as support is actionable.

PAAS

Focus

One of the more actionable looking miners. Closed high of week above its previous short-term resistance level and into the 30-week. 2 weeks ago it faded at the 30-week so its likely relevant and a move above would be actionable.

RGLD

Short term extended coming up the right side of a previous resistance so watching how it acts. Similar thoughts here can it trade sideways 1 or 2 weeks?

HL

Worth keeping an eye on now that its above the 30-week. Does it trade tight inside week above it? Or retest? It would setup good r/r

B

Clean action through down trend line and multi-month resistance. Watching to see an inside week or retest of the ~43 pivot.

AUGO

Worth keeping an eye on as it comes up the right side here for any inside weeks or tight ranges before its prior high pivot.

IAG

Ideally this trades tight and near highs of last week like it did 2 weeks ago. It would offer quiet spot to get involved. Approaching its previous high another level to keep an eye on for breakout.

EQX

First close above the 30-week. If it retests or shows any support at the 30-week and shows respect it could offer a spot to get involved.

WPM

Short term extended but approaching its prior high pivot. If it trades sideways 1-2 weeks around here it becomes actionable.

AU

Short term extended but also approaching a major new high pivot. Ideally a tight week sideways minimum like 2 weeks ago sets up an opportunity to get involved.

Copper

COPX vs QQQ4-wk RS+16.7%1-wk RS+13.1%

FCX

Focus

Strong weekly breakout of a big organized base. Good to see for group and a more actionable looking name like SCCO. Interested in FCX on a pivot retest.

SCCO

Strong action with new weekly closing high out of a big base. Watching how it acts next week if it offers a good entry to get involved around the pivot.

Financials & Fintech

ARKF vs QQQ4-wk RS+11.1%1-wk RS+7.5%

Trading & Digital Asset Platforms

HOOD

Strong action in HOOD as crypto strengthened last week. Next pivot is ~113 I would be watching for a close above.

Healthcare & Biotech

XLV vs QQQ4-wk RS+3.0%1-wk RS+6.9%

Diagnostics, Health Data & Devices

NTRA

Trading organized and tight... now has the 4-week behind it. I would have my eye on its recent ~321 pivot which coincides with the 4-week for a spot if I was interested in getting involved.

BFLY

Last week it made a new weekly closing high and above its multi-month resistance. I would be watching for follow-through or on weakness if it holds its pivot and has a clear resistance - support flip.

GH

After GH broke out of its main base end of May, it acted organized and has been moving building another base on top of its base. It's now eight weeks tight and in a current leading group and looks near actionable.

TEM

Last week looks like trend starting action, and the group is leading. This is a stock to watch for when it offers a tight spot to get involved. Now above all key moving averages and its prior resistant level.

Large-Cap Pharma

JNJ

Closed above its base pivot. On watch for a retest or on follow through any pullbacks to the rising 4-week

MRK

Extended for an entry but strong trend starting action out of a large tight base great for group

LLY

Closed above its base pivot. On watch for a retest or on follow through any pullbacks to the rising 4-week

ABBV

ABBV broke out of a 8-week base last week and is sitting right above its pivot. Risk can be managed here anticipating this breakout sticks with tight stops or seeing if we see a successful retest of the 260 pivots.

GILD

GILD ended up breaking out of that downtrend line weeks ago and tightening up, and then following through the past two weeks, and is now almost at new highs. This looks strong currently and was something on watch that was dismissed because I was focused more on growth stocks which have been deteriorating while healthcare currently looks like this

Materials, Energy & Industrials

XLB vs QQQ4-wk RS+0.2%1-wk RS+4.4%

Base & Specialty Materials

BALL

PKG

Memory & Storage

DRAM vs QQQ4-wk RS+4.0%1-wk RS+3.1%

Storage Systems & Components

STX

Still can just be basing but not interested yet after last week. Need to see it tighten up and group act better

Memory Producers

MU

Holding up well for now just weak group at the moment. I wouldnt be suprised if this is topping or ends up being a base before another leg higher. Not interested yet.

Software

IGV vs QQQ4-wk RS+12.7%1-wk RS+1.8%

Collaboration & Content Workflow

DBX

3 weeks tight closes sitting above a multi year resistance. Now looking like confirmed resistance - support and good r/r

BOX

Focus

3 weeks tight under a big resistance level. Above all key moving averages. Looks good r/r close through 33.50 area likely triggers another leg higher.

ADBE

Working up the right side above all key moving averages. Pushing out of its 3 week tight range.

FIG

Focus

Broke above its multi-month resistance and above all key moving averages. Cluster of support under it and good r/r 25-28 range.

Industry-Specific Operations

SHOP

Focus

Big trend starting push higher followed by 2 tight weeks near highs is a sign of strength and lack of sellers despite the big fast move. Above 4-week and within the 145-155 range looks actionable

MANH

Not actionable here but more good software action. Tight in the big weeks wick then follow through.

Workforce & Payroll

WDAY

In the prior candles wick or another week sideways here above the 4-week would set up a great r/r entry.

ADP

Consolidated 3 weeks tight in the big candles wick and chugging higher while trailing the 4-week. Strong and good for software group.

PCTY

Trailing 4-week still within a small consolidation.

PAYC

Barely rested after a big move and moving higher. Not actionable now but good sign for software

Cloud & Developer Infrastructure

SNOW

Software leader 3 weeks tight on the 4-week near highs. These tight ranges and 4-week support give good opportunities

DOCN

Keeps finding resistance at the 10-week and ~137 pivot so when it gets through if software stays strong this likely gets going.

Cloud Communications

FIVN

3 weeks tight into the 4-week sets up good risk reward either within this tight range or through weekly closing hig

AI Applications & Data Platforms

SOUN

Not the strongest looking chart but looking like a setup regardless. Push through $8 likely triggers new trend.

PLTR

Software leader and no sellers after such a massive move. Last week was probably the spot to sneak in but I hesitated with growth action in general. Ideally this sets up well before $200 pivot but if not I will be forced to buy through $200

Robotics & Autonomy

BOTZ vs QQQ4-wk RS+2.2%1-wk RS-2.1%

Robotics & Industrial Automation

ZBRA

3 weeks tight near highs of its range. It looks strong and is approaching a major resistance not too far above that could ignite a further move. Strong and tight looking

Cybersecurity

HACK vs QQQ4-wk RS+1.8%1-wk RS-3.2%

CRWD

Still not broken just ugly wide & loose action. Watching how the group shapes up not interested in this for the moment though.

OKTA

If cybersecurity ends up moving higher then this down week in OKTA could actually make it more actionable. It struggled to break out and looked like it could use more time basing. If it tightens up and comes around I would be interested again.

PANW

Cybersecurity leader still above key moving averages and retesting its prior pivot. Not broken yet

FTNT

Finally has been moving sideways and resting which makes it more attractive if the group gets going again

RBRK

Still above a major pivot and acting good just cyber theme showed signs of weakening last week and theme is most important. If the group shapes up this is one of the top charts.

ALRM

Clear resistance forming the past 3 weeks sideways so a move through it would be significant.