Here's Why Technology Stocks Are Going To Fall
Alexandros Yfantis | Oct 30, 2017 07:06AM ET
This week’s Chart of the Week features the Technology Select Sector SPDR ETF(NYSE:XLK).
After a remarkable week last week in large cap technology company earnings, on Friday, XLK closed just 2.30% away from its all time high during March, 2000. That being said, the technical overview of XLK is suggesting that the ETF is ready for a pullback.
We are utilizing the standard deviation channel on a 90 day graph for XLK to determine a potential pullback to $57.41. After reaching a high of $62.71 on Friday, XLK reversed off the trendline indicated above and this appears to be a near term top. Additionally, the relative strength index for XLK exhibited a 22 point gap upward putting the ETF in overbought territory.
To the downside, we look for $60.80 and $59.08. In the extreme case, $57.41 could be reached. However, our target on this trade is the $59.08 level. Overall, we are not expecting a massive crash for technology stocks like we saw in the early 2000’s, however the sector should see a slight correction before making its next move higher.
Disclosure: None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that June be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions.
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