Technology Lull?
Technology seems to be on a never-ending uptrend, but nothing goes up in a straight line. Well maybe SMCI does. The stock is now higher 18 of the last 19 sessions and has an RSI above 95. Now contrast that with a name like AAPL, the second largest holding, which we will go into much greater detail about later in this note, comprising 20% of the chart below of the XLK and one can see how it is lagging Microsoft (MSFT is now 22% of the fund and the largest component that we also opine on that name later in this report as well). We are short-term bearish on the group, not because of seasonality or sentiment measured, but because of the PRICE action. Give it credit for acting well following a 2% daily drawdown as seen here, but the negative candlesticks are starting to pile up near all-time highs for the ETF. Monday registered a bearish engulfing candle and Wednesday a hanging man. If this week’s highs of 208.47 are taken out on a CLOSING basis above the bearish thesis needs to be put aside.