TECHNOLOGY SPDR EXCEEDS APRIL HIGH AND SHOWS NEW UPSIDE LEADERSHIP -- APPLE AND MICROSOFT ARE LEADING GROUP HIGHER -- INTEL IS ANOTHER BIG TECH STOCK THAT'S RALLYING -- SO ARE OTHER CHIP STOCKS LIKE APPLIED MATERIALS, BROADCOM, AND NVIDIA
TECHNOLOGY SPDR RESUMES UPTREND... Last Thursday's message wrote about the technololgy sector being one of the markets weakest groups this year. That may finally be changing for the better. Chart 1 shows the Technology Sector SPDR (XLK) exceeding its early April high to reach the highest level in six months. The XLK/SPX relative strength ratio (gray area) has also turned up. That's the first sign of upside leadership coming from the technology this year. Thursday's message suggested that an upturn in Apple (the sector's biggest stock) from an oversold condition would be a big help to the sector. It also showed Microsoft (the second biggest stock) breaking out to the upside. Over the past week, both stocks have gained 9% and 7% respectively. Another big teck stock that has turned up is Intel. So have some other semiconductor stocks.
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Chart 1
INTEL TURNS UP... Last Thursday's message showed the Market Vectors Semicoductor ETF (SMH) hitting a new nine-year high. It is now trading at the highest level since 2002. It also showed KLA-Tencor and Texas Instruments near major uspide breakouts. [KLAC lost 7% last Friday, but is rebounding again]. Chart 3 shows Intel (the biggest stock in the SMH) rallying during April to the highest level in seven months. Its relative strength line (gray area) has also turned up. Intel is also the fifth biggest holding in the XLK. That's another reason that the technology SPDR has rallied this week and is finally showing some upside leadership.
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Chart 2
OTHER CHIPS LEADERS INCLUDE AMAT, BRCM, AND NVDA... Several other chip stocks in the SMH are achieving upside breakouts of their own. Chart 3 shows Applied Materials (AMAT) trading at the highest level in two years. Its relative strength ratio (gray area) has also turned up. Chart 4 shows Broadcom (BRCM) breaking out to the highest level since last Sepember. Its relative strength line is now rising. Chart 5 shows NVIDIA (NVDA) also turning up and trading at the highest level in seven months. Its RS line is also rising. As I suggested last Thursday, this year's poor performance in the technology group offered investors the opportunity to start accumulating the oversold sector at cheaper prices. They appear to be doing just that. That's a good sign for the technology sector and the market as a whole.
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Chart 3
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Chart 4
