Technology sector participation is declining | decision point

The Technology sector (XLK) continues to dominate and lead the rally, but fewer and fewer stocks within the sector are participating in the rally. We know this because the Silver Cross Index (SCI), which measures the percentage of stocks in the technology sector with a Silver Cross buy signal (the 20-day EMA is above the 50-day EMA), is sitting at just 54.60%. Almost half of the stocks ~ no On a buy signal.

Additionally, looking at 7 years of data from SCI (chart below), we can’t find another instance where XLK hit an all-time high without the Silver Cross index being too low to lead to price weakness. . Of course, we owe this confusion to the magic of market capitalization. While fewer and fewer technology stocks are participating in the rally, mega-cap stocks are those that are hitting new highs and driving up the prices of all the price indexes of which they are members. The numerous negative differences we see tell us that this probably won’t last for long.

conclusion: Participation in the technology sector has been declining since the beginning of the year. Megacap stocks are currently enjoying price gains, but that probably won’t last.

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