Today I want to take a quick look at four key Technology ETFs to get a feel for the health of Technology sector as a whole heading into the second quarter.
The first group I want to look at is the Semiconductors… via the Philadelphia Semiconductors Index (SOX). The SOX is a heavily followed index that can be traded via its ETF under ticker symbol SOXX. Note that the SOX topped in March and continues to chop around ever since. It’s currently trading just below a key pivot level at 705 and between the 50 and 200 day moving averages. For now, the group gives us no reason to do anything other than cherry pick select names.
Philadelphia Semiconductor Index (SOX) Chart
The next group within the Technology sector that is on my radar is Software. Looking at the iShares Software ETF (IGV), you can see that it has formed a symmetrical triangle much like the major indices. With support re-affirming at the rising 50 day moving average, this appears to be headed higher. A breakout above wedge resistance would also be supportive of the technology sector as a whole. Keep this one on watch.
iShares Software ETF (IGV) Chart
Turning to the Internet group, the Powershares Internet ETF (PNQI) is struggling with a major resistance level after breaking a wedge earlier this year. The current formation could be a continuation or a topping pattern, we just don’t know yet. Watch for a break through the high or the low of the pattern… that will likely determine the next 5 dollar move.
Powershares Internet Portfolio ETF (PNQI) Chart
Lastly, the PureFunds Cyber Security ETF (HACK) continues to find buyers at the rising 50 day moving average. It also looks like a test of the March downtrend is coming soon. Bulls will be looking for a breakout here.
PureFunds Cyber Security ETF (HACK) Chart
In summary, the Technology sector is a mixed bag right now, as investors await the next move of several tech groups.
There is little reason to be overweight the sector here and now. Semi’s, at least, need some time to set up again. It’s also disconcerting that the Internet Index has struggled at this resistance level. That said, it’s a reverberation of the broad market. Struggling large and mega caps are acting weaker than their small US-centric counterparts. Note PNQI is mostly XXL corporations. And although the Software group is setting up nicely, I doubt it will outweigh the other groups. In short, it’s a stock pickers market. Thanks for reading!
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
