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Technology Stocks Lead the Broader Markets Higher

David Becker
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www.iforex.com
Technology Stocks Lead the Broader Markets Higher

An encouraging sign for the stock was this week’s improvement in the Nasdaq market. The Nasdaq was the market leader during most of 2013, and to see stock move back into leadership position is a good sign. The daily bars show the Nasdaq Composite Index ended the week above its mid-May peak and its 50-day moving average. An even stronger performance was turned in the by the Nasdaq 100. The QQQ is made up of the largest 100 non-financial stocks in the Nasdaq. This tells us that technology stocks led the way higher.

The technology SPDR hit a new 13-year high. Its relative strength line has also broken out to the upside, reflecting accelerating positive momentum. Additionally, this tells us that most large cap tech stocks performing well.

The larger stocks in the Technology SPDR (NYSEARCA:XLK) that have seen relatively big gains over the last couple of months. In order of relative strength, they include Hewlett-Packard (NYSE:HPQ) , Cisco (NASDAQ:CSCO) , Oracle (NYSE:ORCL) , Apple (NASDAQ:AAPL) , and Verizon (NYSE:VZ) . Apple always bears close watching because it is the largest stock in the XLK (15%). The weekly chart shows that Apple is reaching an eighteen-month high and heading up towards its 2012 peak near 676. The Apple/XLK ratio has just broken out to the highest level in more than a year.

Apple closed higher on Friday notching up a 1.1% gain, closing slightly above 614. The next level of target resistance on the stock is seen near $650, while support on the large technology company is seen near the 50-day moving average at 556.

Momentum is beginning to pick up as the MACD (moving average convergence divergence) index generates a slight buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.

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