Sunday, October 2, 2011

Technology Sector Drops -8% for Quarter (Chart) *Consolidation & stabilization continues* XLK

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XLK peaked at a February 17, 2011 close of 27.04 and a February 18, 2011 intraday high of 27.09

XLK Overview XLK, the Technology SPDR, ETF, closed the quarter-ended September 30, 2011 at 23.60 and was down -8.17% for the quarter. XLK is down -6.31% for 2011 and up +78.52% from the March 9, 2009 market cyclical low. A multi-year peak close of 27.04 was reached February 17, 2011, the highest close since 27.37 on December 26, 2007. XLK is now -12.72% below this recent peak.

S&P 500 By comparison, the overall market, the S&P 500, was down -0.44% for the week, was down -7.18% for September, was down -14.33% for the quarter, is down -10.04% for 2011, and is up +67.24% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on April 29, 2011, the highest close since the June 9, 2008 close of 1404.05, and is now -17.03% below that peak. XLK is outperforming the overall market long-term since the March 9, 2009 market bottom, outperforming the market in 2011 though both are negative, and underperformed the market for the quarter-ended 9-30-11. A review of the S&P 500 is here, S&P 500 Closes Quarter Down -14.3% (Chart) *USA recession ahead?*.

XLK Daily Chart Below is a daily chart of the XLK since the February 17, 2011 multi-year peak to illustrate the overall price decline and interactions.

XLK Chart Review
Intermediate-Term Trend: ascending 25d avg < descending 50d avg, XLK < both, bearish
Long-Term Trend: XLK < 10m ema 24.89, bearish
Key Resistance: trading range midpoint 23.88, 400d avg 24.16, 20d avg 24.18, 50d avg 24.37
Key Support: trading range closing low 22.52, trading range intraday low 22.47
Moving Averages: below 20d, 50d, 100d, 200d, 400d avgs
Uptrend Line: above since 7-27-11, line from 3-9-09 lo 13.22 to 7-2-10 lo 20.29
Downtrend Line: below since 2-18-11, line from 10-31-07 hi 28.40 to 2-17-11 hi 27.04
RSI 14-Day: 48.05 is reasonable, descending
RSI 28-Day: 55.11 is reasonable, descending
MACD (12,26,9): = -0.04, descending
Volume: lower 16.5M latest day, 50-day avg = 20.0M

Conclusion XLK is trading at levels last seen in autumn 2010. Economic, fiscal, and political uncertainties have pulled XLK, along with the equity markets, downwards. By peaking on 2-17-11 at a multi-year high  and then generally downtrending, XLK was a leading indicator of the the S&P 500 peak on 4-29-11 and subsequent general descent. The intermediate-term indicator is bearish and the long-term indicator is bearish.
● 200-Day Average XLK dropped below the 200-day average (25.53) on August 2, 2011 and continues well below.
● 300-Day Average XLK initially dropped below the 300-day average (24.75) on August 5, 2011 and has 4 subsequent failed attempts to rally above.
● 400-Day Average XLK dropped below the 400-day average (24.16) on August 8, 2011 and has not been able to sustain a rally above.
● Fibonacci 23.6% Retracement XLK dropped below the Fibonacci 23.6% retracement (24.82) on August 4, 2011 and continues well below. The Fibonacci range utilized is from the 10-31-07 cyclical closing high of 28.40 down through the 3-9-09 cyclical closing low of 13.22.

XLK Portfolio Holdings These top 10 holding comprise 64.97% of the total holdings. The top 10 holdings, the estimated weight, of the Technology SPDR, at September 30, 2011, are:
Apple 15.02%
IBM 8.89%
Microsoft 7.89%
AT&T 7.19%
Google 5.51%
Oracle 4.85%
Verizon 4.45%
Intel 4.06%
Cisco 3.62%
Qualcomm 3.49%

About the XLK The XLK represents an estimated 22.72% of the S&P 500 by weight. Stocks primarily covering products developed by Internet software and service companies, IT consulting services, semiconductor equipment and products, computers and peripherals, diversified telecommunication services and wireless telecommunication services are included in this Index. Components include Microsoft Corp., AT&T, International Business Machines Corp., and Cisco.

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