Technology XLK (ETF)
ByLast month, I stated that the technology sector was an attractive October purchase, either in the second week or last week of October and given current market conditions I would favour the last week of October. The second week of October proved to be at least a shortterm bottom as the sector is currently higher. Two of the bellwethers in this sector, Microsoft and Apple, came out with results that “pleased” investors and moved the sector higher. In the pasts posts I had made, I also stated that investors should watch the relative performance of technology stocks compared with the broad market. Strong performance would indicate positive strength in the market. Even though the technology sector has been outperforming, there is still a long way to go in this seasonal trade. As I mentioned, the technology sector usually does well until January 17th, but investors should consider reducing positions at the start of the Consumer Electronics Show in Las Vegas (January 7th to January 10th). This is the world’s largest electronics trade show and investors often take positions in the sector shortly before the trade show in order to catch a positive movement that is a result of any major technology product announcements. In essence, seasonal investors take advantage of this phenomenon by entering the sector before the other investors and exit after the sector has been pushed up and is over-crowded.
The sector as represented by the ETF (XLK) is currently just below resistance @$22. It is possible that the sector will have some short-term trials at this level, but once it gets through, look for a movement to $24 or $25.
