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Go Western Digital, Young Man

Strong earnings from Seagate suggest good things for the technology sector.

We have talked about the resurgence of the technology sector several times over the last couple of months. On Wednesday, we saw another indication that things are turning around in this group and that demand for technology products may be on the upswing.

Seagate Technologies

(STX) - Get Seagate Technology PLC Report

, one of the largest disk-drive manufacturers, upped its fiscal first-quarter earnings projections by 50%, as hard-drive prices increased amid strong PC demand.

Seagate's announcement suggests that the entire disk-drive sector is seeing better pricing, as well as strong unit demand, which also implies that technology spending is up across the board. Disk drives are one of the basic commodities of the technology sector, and the idea that consumption is exceeding supply bodes well for hardware manufactures.

The improvement in disk-drive demand appears to be coming from an increase in basic technology, such as personal computers, and not from new consumer product introductions. It seems that "old-fashioned" technology products are selling well.

Seagate Technology

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The charts are supporting this conclusion. Traders should take a look at the long-term weekly charts for both Seagate and

Western Digital

(WDC) - Get Western Digital Corporation Report

.

Western Digital is the second-largest disk-drive manufacturer behind Seagate. Both stocks have emerged from long-term weekly base formations, and both are consolidating over support. The chart for Western Digital is actually better-formed and more cohesive than the chart for Seagate, but both formations are bullish.

These are large and significant long-term base formations. Judging by the look of these charts and the improving fundamental backdrop, we would expect to see a new primary uptrend emerge in the coming weeks and months. Traders should pick these names up at these levels and let the uptrend develop. The group may see a couple of false starts when we consider the volatile market backdrop, but both names are bullish buys right here.

Traders should also consider what strong fundamental data coming from commodity technology companies such as Seagate means for the broader technology sector.

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If Seagate and Western Digital are selling more hard drives, that means that PC shipments are up, which is good for

Hewlett-Packard

(HPQ) - Get HP Inc. (HPQ) Report

and

Dell

(DELL) - Get Dell Technologies Inc Class C Report

. If PC shipments are up, it also bodes well for

Intel

(INTC) - Get Intel Corporation (INTC) Report

and

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

.

When we see strength in one of the most basic commodities in the sector, it may be time to look around the entire group for strength.

At the time of publication, John Hughes and Scott Maragioglio had no positions in the stocks mentioned. Hughes and Maragioglio co-founded Epiphany Equity Research, which has developed and utilizes proprietary tools to identify and track liquidity changes in the market indices and sectors. Hughes advises numerous asset managers, hedge funds and institutions managing in excess of $30 billion. Maragioglio is a member of the market technicians association (MTA) as well as The American Association of Professional Technical Analysts (AAPTA) and holds a Chartered Market Technician (CMT) designation. Maragioglio has also served on the board of directors of the AAPTA.