This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Has Tech Run Its Course?

Stocks in this article: XLK AAPL QQQ

Nothing tells the story of supply and demand better than the Money Flow Index. Demand through January for XLK was at exceedingly high levels, but it has declined over the past several trading sessions.

Other indicators confirm the declining demand. The relative strength index hit its previous high before the August selloff and has begun to retreat.

Stochastics are rolling over from an extended overbought period. The MACD signal line is about to make a bearish crossover, and the histogram looks to be heading into negative territory. Our +/- directional indicator at the bottom of the chart shows positive direction has rolled over from a high and negative direction has just turned upward.

Everything on this chart shows a tiring trend about to decline. The question is how far.

We have an ascending triangle formation by the upper and lower trend lines. Generally, this indicates fewer and fewer sellers as the lower trend line ascends. Typically it's bullish.

From the lows in August, the lower trend line was established by the late September low. That lower trend line was tested again at the December low and proved true.

On the upper trend line established from the July highs we have only had one major test at the October highs.

Although, price may appear to have broken out of the ascending triangle pattern, we may not have a true breakout but rather an overextension based entirely on AAPL's earnings.

The pattern is still wide and typically would have another test of the lower trend line before a true breakout. Additionally, a true break would not have an array of declining indicators.

So, to answer the question of how far, a retest of the lower trend line would likely be just north of $25.25 (based on trend line trajectory and rate of change). That price level would also have the support of the 200-day moving average. A bounce off the lower trend line could spring XLK into a true breakout of the $26.50 level.

XLK isn't far away from its precrash, October 2007 high of $28. If anything is going to go into new realms of an all-time high, it will be tech. Keep your eye on Apple. As Apple goes, so goes tech.

At the time of publication, Gillie had no position in XLK.

Subscribers to ETF Digest receive alerts for trades being placed in the model portfolios.

Follow my intraday commentary and various other observances on Facebook and Twitter.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs