Tech Recovery Is Plagued by Potholes

The always nerve-racking tech stock roller coaster is going to get even wilder in the next few quarters.

Despite unusually strong first-quarter results, and plenty of evidence that the recovery in IT spending is real, technology stocks have struggled since late January. But although valuations have declined significantly as a result, there seems to be no immediate catalyst to spark a rally, and the sector is likely to be buffeted by the dollar's comeback and uncertainty about rising interest rates.

"We had expected a rally now followed by weakness later in the year. But many stocks are breaking 150-day moving averages -- if we don't see strength soon, tech will be back in a bear market," Merrill Lynch's Steve Milunovich wrote earlier this week. ...