Tech Pitstop or Something More Sinister?
Technology continues to be a major focus as the group via the XLK is up 6% YTD. Semiconductors are the outlier with the SMH is almost 20% thus far in 2024. Like many other instruments it has produced some weak candles and negative divergences remain but PRICE seems to be hanging in there. Remember PRICE is omnipotent, but for how much longer will it remain at this lofty altitude? The daily chart of the SMH in the circled area shows a bearish dark cloud cover and some spinning tops which suggest some potential softness upcoming (on the ratio chart it has been a clear winner against software which we will talk about later in this note). The daily chart of the Nasdaq also has some areas of concern, but are too many bearish and looking for a tactical pullback in the 3-5% range which will perhaps add fuel to the fire if we break convincingly to new highs? One does need to keep in mind that the weak seasonality periods will almost be in the rearview mirror, although March has been essentially UNCH for the last 5 years. If the tech benchmarks can remain afloat and just trade sideways through March it will frustrate many as they say corrections in “time tend to be more painful than PRICE.”