Why it might be a good time to buy some tech stocks

  • Technology stocks have performed poorly.
  • Nobody expects them to gather.
  • The SPDR Technology ETF was trading 18% below its 200-DMA earlier this month, a relatively extreme level.

The bubble in post-COVID tech stocks began to deflate over the past year as names like META platforms emerged (META) Amazon (AMZN) and apple (AAPL) hit highs in the fourth quarter. Returns across the technology spectrum, from semiconductors to cloud software stocks, have been abysmal ever since.

The Technology Select Sector SPDR ETF (XLK) is down about 30% from its December peak. However, many stocks have fallen far more sharply. For example, software stocks were hit particularly hard. The iShares Expanded Tech Software Sector ETF (IGV) is down 42%, and the Global X Cloud Computing ETF (CLOU) has dropped by 50%.

The primary trend for technology stocks remains lower as these sector ETFs are still trading below the downtrending 200-day moving averages. Still, we’ve seen several significant rallies in the tech space during this bear market and it wouldn’t be surprising if we saw further upside anytime soon.

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