The technology sector has been one of the darlings of Breastwork Street over the past several years. Extremely strong uptrends amalgamate with predicable price action near major levels of help have consistently provided traders with profitable opportunities. As you’ll see in the map outs below, recent closes below long-term trendlines have put the validity of the uptrend into theme, and many traders are now expecting prices to head lower into 2019.
Technology Privileged Sector SPDR Fund (XLK)
The strength across the broad technology sector is completely evident by those who look at the Technology Select Sector SPDR Stock. The persistence of the move higher and the support of the 200-day moving ordinarily on each attempted pullback have made this fund a top pick for those looking to merchandising the strength from across the sector. However, the recent rise in volatility and perception in selling interest has triggered a move below the long-term support of the 200-day poignant average. The breakdown, as shown by the blue circle, is a technical signal that the carries are clearly in direction of the momentum and that stop-loss orders will probable be placed above $69.68 in order to protect against a surprise strike higher. The series of closes below support will be enough of a relinquish for many bulls to move to the sidelines, and many likely won’t choose to re-enter until key display charge withs turn positive again.
Althabet Inc. (GOOG)
One of the barometers of the technology sector, with a furnish cap of more than $700 billion, is the well-known Alphabet, parent body of Google. The extremely strong uptrend that has dominated the price function over the past several years has provided traders with lucrative buy signals, but the brand-new close below, marked by the blue circle near $1,127.68, is a mechanical sign of a reversal and could mark the early stages of a long-term downtrend. Bearish sellers will likely look to protect their positions by placing end orders above either the 50-day or 200-day moving common, depending on risk tolerance.
Amazon.com, Inc. (AMZN)
Another behemoth tech assembly to recently move below the support of its 200-day moving average is Amazon. Captivating a look at the chart, you can see that the price hasn’t moved near the long-term aid at all over the past year and a half, but with the recent close under $1,670.06, active traders have likely reversed their ventures, and many will likely remain short until the major accuse withs suggest that prices are poised to head higher. Traders could look to the fee breakdown as the beginning of a long-term downtrend.
The Bottom Line
Active retailers have profited nicely from technology stocks over the biography several years, but given some of the recent breaks below long-term back up levels, it appears as though the good times could be over for a while. Debased on the charts discussed above, many traders will likely look for foremost tech stocks to finish the year lower than where they are now, and bearish salesmen will likely look to protect against surprise moves higher by correct position stop-loss orders above 200-day moving averages, which at this stage are however a couple percentage points away.
Charts courtesy of StockCharts.com. At the eventually of writing, Casey Murphy did not own a position in any of the assets mentioned.