On Monday, Saxo Head of Equity Strategy Peter Garnry published his outlook on the technology sector
given the escalation of the China-US trade war.
Today, I'd like to take a look at the technical picture.
The SPDR Technology Select ETF (XLK:arcx) tracks the biggest tech companies in the S&P 500 index. The technical picture here looks quite similar to that of the Nasdaq 100 – no major surprise, as 35% of the ETF consists of Microsoft and Apple. Include Cisco, Oracle and Intel and the percentage rises to more than 45%
Support for XLK seems to lie around $73. A close below that area will confirm a downtrend, likely triggering a sell-off down to test support at $69.
The Relative Strength Index is currently bearish with no divergence, i.e. there is potential to another push to test support at $73.
A close above $76.50 is needed for the current bearish picture to be demolished. A close of the gap from yesterday could be the first warning that this resistance level could come under pressure.