Is That a Top In Tech?

I know, I know. Trying to call tops and bottoms is a mug's game. Believe me, I know from experience. And it really depends on your time frame. But, technology stocks have been getting hit pretty hard so far this year so let's take a closer look.

First, lets look at big tech. The QQQ is heavily weighted toward the mega caps with AAPL, MSFT, AMZN, and TSLA making up over 33% of the ETF. 

As a trend follower, I just see lower highs and lower lows on the daily chart and this equals a downtrend until we start to see the opposite. Besides that, 380 price support and the trendline (dotted) have also been breached. Not good.

Right now it looks like QQQ could be headed towards Monday's low. If that doesn't hold we could see more weakness in the mega-caps which I don't think would be very good for most sectors and industries. 

Other areas like software have also been in a downtrend since topping out in November. The selling continues and by definition software stocks are in a bear market trading lower by 20%.

There's another technology story that is getting a lot of attention lately. You may have heard of it. The Ark Innovation ETF. 

This fund which holds technology names like COIN, HOOD, TDOC, and ZM is trading lower by 50%. It had a spectacular run from the 2020 lows but lately, it has come under some serious selling pressure.

So far 2022 has not been kind to technology investors so it might be a good time to take a close look at what you own and why? And if you have cash on hand it's also a good time to start preparing a buy list. 

Are you sitting tight? Or are you buying into the technology weakness?

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.