5 Hot Tech ETF Charts With Upside Potential

 | May 17, 2017 12:04AM ET

No subdued retail earnings, no weaker-than-expected economic readings could come in the way of the Nasdaq’s ascent. The tech heavy index went on hitting all-time highs after crossing the major landmark of 6,000 for the first time in late April, mainly on the back of the tech rally (read: XLK (up 8.6%) offered almost four times return than the SPDR S&P 500 ETF Trust (AX:SPY) (up 2.6%)and SPDR Dow Jones Industrial Average (SI:SPDR) ETF Trust (V:DIA) (up 2.3%)in the last three-month timeframe (as of May 16, 2017).

Reasons Behind the Rally in Tech Stocks

Solid Earnings

Investors should note that the earnings picture of the technology sector has been reassuring lately. Expected earnings growth for the technology sector for Q1 of 2017 is 12.7% on 6.2% higher revenues, as per the Earnings Trends published on May 10. The earnings growth rate is the second highest among the other industries. Revenue growth expectation is also decent.

Global Cyber Attack

A global ransomware attack "WannaCry," which locked down over 200,000 computers, gave another round of boost to the tech rally. The incident specially benefited cyber security ETFs like PureFunds ISE Cyber Security ETF Cybersecurity ETFs Set to Rally After a Global Cyberattack ).

Apple Topped $800 Billion Market Cap Mark

Technology giant Apple (NASDAQ:AAPL) also emerged as the first U.S. company with a market cap of over $800 billion in early May, courtesy of upbeat tones by Warren Buffett and the highly optimistic report from analyst Brian White of investment firm Drexel Hamilton (read: What's Causing the Surge in Taiwan ETFs? ).

Rising Semiconductor Demand

Among the whole of tech sector, semiconductors are riding high. For Q1 of 2017, the space is expected to score about 52.4% of earnings growth just behind the miscellaneous technology’s stellar growth rate of 87.1%, as per the Earnings Trends .

Growing Uncertainty Over Trump's Protectionist Policies

The Trump administration’s tone softened lately on several key protectionist issues on immigration and outsourcing – the two pillars that the tech sector stands on. Plus, with controversies doing rounds about the leakage of "Trump Trade Advisor's Comments Boost Mexico ETFs ).

Hot Tech ETF Charts with More Room for Run

Below we highlight tech ETFs (and the corresponding charts) that were at all-time highs on May 16, 2017. These funds may see more run ahead. We focused on the fund’s weighted alpha (positive weighted alpha leads investors to those companies whose strong momentum is building ) and volatility levels and compared the metrics with SPY (NYSE:SPY) and XLK.

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Notably, the weighted alpha and volatility of SPY are +32.40 and 3.68%.

Global-X Social Media ETF (CM:SOCL)

Weighted Alpha – +54.70 ; Volatility (14d) – 14.07%