What About Tech?

One of the leaders since the low in March has been the technology sector. Of late a quick look at the chart of the Dow Jones Technology Index shows a rounding top or a narrow consolidation range developing. This is not a bad thing and thus far the index has held up nicely while consolidating the gains from the move higher four weeks ago. The chart below is one I posted last week and I wanted to publish it again as a reminder we have not broken below support and the sector is not dead yet.

Short term we have a logical reason to tighten our stops or take some money off the table, but longer term we are still in a bullish uptrend and the indications are for move upside over time. Please re-read that sentence. Over time (6-18 months) the sector remains bullish and the current consolidation will present an opportunity to add shares or a new positions.

The sector has held the 20 day moving average and remains bullish from my view. Technically the selling volume has been below average and the trendline is still in play. A test of the trendline would be a opportunity. For now the challenge is to be patient and let this play out. Too often as investor we feel the need to be psychic and predict the future. Let the consolidation play out and the direction define itself. I understand you may miss out on the first 3, 4 or 5% gain, but as I stated above, looking longer term the opportunity is still valid. After all it isn't about maximizing return, it is about achieving your financial objective.

The sub-sectors of interest here are semiconductors (IGW) which show a similar chart of an accelerated run higher which is now consolidating. Look for support to hold above $39.10 near term or the 20 day moving average. Software (IGV) shows the same pattern development and support of the 20 day and $40.50. Networking (IGN) is sitting on support at $24.50 and the 20 day moving average. Computer Hardware (HWI.X) is the strongest of the sectors with a long term uptrend still in play.

This sector is not dead yet! There may be a pullback short term, but I see that as an opportunity for the longer term outlook. Perspective is the key. Stay focused on what you want from your money and not someone telling you what to think. Discipline is the key - define what you want, how much risk your are willing to accept and the purpose behind your investing. Entry, Exit and Target will keep you disciplined.