Reading Market Turns With Leveraged Relative-Strength Ratios

What a Leveraged Relative-Strength Ratio Is

A conventional relative-strength ratio usually compares two instruments with no structural link — simply asking which rose faster or fell less.

The ratio in this piece is different. Here the two instruments are closely related and differ only in leverage or product structure: Apple and the 3× leveraged TQQQ ride the same technology-stock trend, and TQQQ and QQQ are built on the very same index constituents.

So I call this approach a Leveraged Relative-Strength Ratio (LRS ratio): between instruments that share a source or are closely related, it compares the leveraged side against the unleveraged (or lower-leverage) side, to read whether leverage is still able to extend its advantage or has begun to be punished by the market.

This piece uses three LRS ratios:

- AAPL/TQQQ — Apple's strength relative to the 3× leveraged TQQQ - TQQQ/AAPL — the same ratio inverted - TQQQ/QQQ — leverage versus non-leverage in its purest form, with Apple's company-specific factors removed

Each is explained below.

1. AAPL/TQQQ

AAPL/TQQQ is not a common textbook indicator. It's a relative-strength lens I built from how Apple and TQQQ behave differently in bull and bear markets.

The logic behind it is simple.

In a technology-stock bull market, TQQQ is a 3× long ETF on the Nasdaq-100. When the Nasdaq keeps rising, TQQQ usually rises faster than ordinary technology stocks.

Apple is one of the most important large-cap technology companies in the market, but it is still a single, unleveraged stock. In a clear uptrend, even a well-performing Apple rarely outruns a 3× leveraged TQQQ for long.

So in a healthy, strong tech bull market, TQQQ tends to rise faster than Apple, and the AAPL/TQQQ ratio keeps falling.

When the market starts to weaken, that changes.

TQQQ's 3× leverage magnifies gains on the way up and losses on the way down. Apple falls with the market too, but as a large, mature, highly liquid company it is usually steadier than TQQQ.

So as the market turns from bull to bear, TQQQ tends to fall more than Apple, and the AAPL/TQQQ ratio stops falling and gradually turns up.

What I'm really watching, then, isn't how much Apple has risen — it's whether TQQQ can still outrun Apple.

As long as TQQQ is clearly stronger than Apple, the AAPL/TQQQ ratio usually keeps falling, which says the market's appetite for risk is still firm.

But if, after a long decline, the ratio stops making new lows, starts to base, and even turns up, it means the market's most aggressive leveraged asset can no longer outrun the large-cap names the way it used to. That is often a change worth watching.

Why "stops falling" matters

Many people wait until stocks have already fallen sharply before admitting a bear market might have arrived. But the real turn often shows up earlier, in relative strength.

Late in a bull market the major indices may still sit near their highs, and Apple may not yet have visibly declined — but TQQQ's relative advantage may already be fading. At that point the AAPL/TQQQ ratio may stop falling first.

It won't necessarily surge immediately; it may consolidate at a low level for a while. But once the long downtrend ends, the original market structure is changing.

In a strong bull market a 3× leveraged TQQQ should clearly outrun Apple. If it suddenly can't — or starts to lag — the issue is not only that Apple got stronger, but that the whole tech market's upward momentum may be weakening.

So for me, the most notable thing about AAPL/TQQQ isn't how high it has already climbed, but whether it has stopped falling at a low. If it completes a base and turns up, it may mean the market is near a top, or entering the transition from bull to bear.

2. TQQQ/AAPL

The same logic can be read the other way, as TQQQ/AAPL.

A rising AAPL/TQQQ means Apple is strengthening relative to TQQQ; a falling TQQQ/AAPL means TQQQ is weakening relative to Apple. Both describe the same thing, just flipped on the chart.

For some investors TQQQ/AAPL is more intuitive, because it shows the 3× leveraged tech asset's strength relative to Apple directly. In a tech bull market TQQQ rises faster than Apple and TQQQ/AAPL rises; in a tech bear market TQQQ falls more than Apple and TQQQ/AAPL falls.

On the chart, from November 2021 to October 2022, TQQQ/AAPL fell from a high all the way to a low — a drop of more than 78%.

What does that mean? Not that Apple was especially strong over that span, but that TQQQ collapsed severely relative to Apple. In the 2022 bear market Apple was hit too, but TQQQ, carrying 3× leverage, fell far more — so TQQQ/AAPL lost more than seventy percent over the period.

That enormous swing shows the difference between the two assets across bull and bear very clearly.

Around October 2022 the market put in an interim low, and TQQQ/AAPL stopped falling at a low. As tech strengthened again, TQQQ began to outrun Apple once more. From that low to the later high, TQQQ/AAPL more than tripled — the chart shows a maximum gain of about 360%.

In other words, the ratio first fell more than 78% in the bear market, then more than tripled through the next tech advance. That is exactly the character of a leveraged product: when the market falls, TQQQ collapses relative to Apple; when the market re-enters a strong uptrend, TQQQ quickly outruns Apple again.

So whether you use AAPL/TQQQ or TQQQ/AAPL, you are watching the same thing: whether the market is rewarding leverage or punishing it.

Two ways to read it

Using AAPL/TQQQ:

- Falling — TQQQ is outrunning Apple; the market is firm. - Stops falling — TQQQ's relative advantage is starting to fade. - Rising — TQQQ is clearly weaker than Apple; market risk is rising.

Using TQQQ/AAPL:

- Rising — TQQQ is outrunning Apple; the market is firm. - Tops out — TQQQ's relative advantage is starting to weaken. - Falling — TQQQ is falling more than Apple; the market is turning weak.

I personally lean toward AAPL/TQQQ, because a ratio turning up from a low is easy to associate visually with rising risk. But TQQQ/AAPL works just as well, and it shows more directly how TQQQ gains its edge in a bull market and loses it in a bear market.

What the ratio is really watching

On the surface I am comparing Apple and TQQQ. In reality I am watching two different market forces.

Apple stands for the large, mature, relatively stable technology heavyweight. TQQQ stands for high-leverage, high-volatility, high-risk-appetite technology exposure.

When the market is willing to take risk, investors favour high-beta, high-leverage products, and TQQQ tends to outrun Apple. When the market turns defensive, investors cut leverage and trim high-volatility positions, and TQQQ falls more than Apple.

So the ratio is really a measure of how the market's risk appetite is changing. It helps me see:

- whether the market is still willing to chase leverage; - whether high-risk technology assets are still leading; - whether large-cap heavyweights are starting to strengthen relatively; - whether the market may be nearing an important top or bottom.

Why not just watch TQQQ's price

You can, of course, just watch TQQQ's price. But watching TQQQ rise or fall on its own doesn't always reveal the structural change inside the market.

For example, TQQQ may still be rising, but rising more slowly than Apple. In absolute price it hasn't weakened; in relative strength its former lead has already begun to fade — a change that can appear before any formal price decline.

Likewise, TQQQ may still be falling, but if it starts to hold up better than Apple and TQQQ/AAPL stops making new lows, it may mean the most pessimistic phase is nearing its end.

The value of ratio analysis, then, is that it tells us not just whether an asset is rising or falling, but whether — relative to another asset — it is getting stronger or weaker. Market tops and bottoms very often begin as changes in relative strength.

3. TQQQ/QQQ

AAPL/TQQQ and TQQQ/AAPL are intuitive, but they share one drawback: Apple is, after all, a company.

Apple's own earnings, product cycle, valuation, buybacks and corporate news can all move the stock. So an AAPL–TQQQ ratio may still carry some interference that belongs to Apple itself. To strip those uncertainties out further, you can watch another ratio: TQQQ/QQQ.

TQQQ and QQQ both track the Nasdaq-100 — essentially the same basket of stocks. QQQ is the ordinary unleveraged ETF; TQQQ is the 3× leveraged one.

TQQQ/QQQ's great advantage is that numerator and denominator share essentially the same underlying assets. It removes single-company factors like Apple's and reflects the leveraged product's performance against the plain index product more directly.

In a strong bull market TQQQ usually outruns QQQ and TQQQ/QQQ tends to rise; in a falling or high-volatility market TQQQ tends to lag QQQ and TQQQ/QQQ falls.

So TQQQ/QQQ answers a purer question: is 3× leverage currently adding to returns, or dragging on them?

AAPL/TQQQ is more of a comparison between a large, stable tech name and high-leverage tech exposure; TQQQ/QQQ compares leverage against non-leverage on the same Nasdaq-100 base. The two complement each other.

If AAPL/TQQQ has begun to rise while TQQQ/QQQ has begun to fall, it says TQQQ is lagging not only Apple but plain QQQ as well. That combination is clearly more worth attention than either ratio on its own.

Closing

I built AAPL/TQQQ not because it can predict the market precisely, but because there is a very clear logic behind it.

When tech is rising, a 3× leveraged TQQQ should rise faster than Apple and AAPL/TQQQ should fall. If, after a long decline, the ratio starts to stop falling, it means TQQQ can no longer widen its lead over Apple, and the market's former upward structure may be changing. In a bear market TQQQ usually falls more than Apple, and AAPL/TQQQ rises noticeably.

Read the other way, TQQQ/AAPL shows the same thing. From November 2021 to October 2022 it fell more than 78%; from the October 2022 low it more than tripled. That vast swing captures how leveraged assets amplify both the bull and the bear. Finally, TQQQ/QQQ removes Apple's own company factors and lets you watch leverage versus non-leverage more purely still.

So what I follow is never the number of any single ratio, but the market state the ratio reflects: in a bull market the market rewards leverage; in a bear market it punishes leverage. When that relationship begins to reverse, the market's direction may be quietly changing too.

This is market observation and personal opinion only. It does not constitute investment advice.