Charts Reveal Technology Stocks Could Lose Much of Their Gains
The stock market has proved to be more volatile this year, and technology stocks could be giving up many of the gains they attained this year.
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Charts don’t lie. Successful stock trading requires you to make the most of the information on hand, and studying charts is an important aspect of trading education. In the examples below we find a great deal of insight by just examining these charts. While the NASDAQ 100 ($NDX) has outperformed the S&P 500 significantly with an 8% rise as opposed to the S&P’s 1.9% indicating vibrant health, experienced analyst Michael Kramer registers his doubts regarding tech stocks. He points out four indications that imply the tech stocks could end up returning much of the gains they have acquired this year.
Four Indications that the Tech Sector Could Experience Declines Kramer points to technical charts that seem to indicate that Microsoft ($MSFT) and Apple ($AAPL) are set to fall along with the NASDAQ 100 and the Select Sector SPDR Technology ETF ($XLK). The declines are set to be significant, up to 15%. Let’s not forget that $XLK, $MSFT and $AAPL have all been able to outperform the broad market quite like the NASDAQ 100. Microsoft rose 9%, Apple rose 4.5% and the Select Sector SPDR Technology ETF by 7%. www.tradezero.co
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NASDAQ 100 – Double Top Indicating Uptrend Reversal Going by the following chart by TradingView.com and posted on Investopedia by Kramer, the NASDAQ 100 experiences two consecutive price peaks, forming a double top which, Kramer points out, is indicative of an uptrend reversal.
Now if the index falls below its 6,150 support level which was previously witnessed in the recent February sell-off, that would be a 11% decline from its present 6,910 level. If the index www.tradezero.co
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manages to find support somewhere around the March low of the stock, 6,650, Kramer says that would be an indication that more declines could be avoided.
Select Sector SPDR Technology ETF The SPDR Technology ETF seems to be on a somewhat similar course to the NASDAQ 100, as the chart by TradingView.com reveals.
This tech ETF could sink to $61 repeating the early February lows, which is a decline in the region of 11% from its current www.tradezero.co
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$68.40 price as seen in early afternoon trading on the 6th of March 2018. If this ETF finds technical support somewhere around $64.95, it could keep itself from a double top.
Apple – A Double Top Not as Pronounced Apple looks to be heading toward a double top, but Kramer notices that it isn’t as pronounced as the ones above.
If a double top does form though, Apple could be experiencing potentially steeper declines than other stocks in the tech sector. That could be a retest of Apple’s February lows, bringing it www.tradezero.co
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down to $150 roughly. That would indicate a decline in the region of 15% from the stock’s current $177.50 as on March 6, 2018.
Microsoft Could Get Back to its Early February Lows Microsoft doesn’t seem to be much different from the stocks we discussed earlier above, and at $95.70 it has all the indications of a double top.
It seems to be in a lower trending condition since late February 2018. The decline could get the stock back to its early February www.tradezero.co
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lows of $84.50, which is a 12% drop from its current $93.75 price, as of March 6, 2018. Further losses could be prevented if support can be found at around $91.40. Kramer believes the tech sector could be in for a reversal with the risks currently growing. It is also an indication of the volatility of the stock market. He notices that this is a marked difference from 2017 where the market swings were relatively small along with record gains.
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