XLK prints a new all-time record high at 76.26 on 4/3/19 and new all-time record closing high at 75.92 on 4/5/19. The SOX, SMH and XSD (chips) all print new record highs as well. Strike up the band. Here comes the Silicon Valley marching band, of course wearing fleece vest uniforms, a parade of overrated tech geniuses each telling the other how smart they are. XLK, the technology sector ETF, topped-out with the broad stock market as Q4 2018 began.
The overbot conditions, rising wedge, universal neggie d and upper band violation all conspired for the major spankdown in late September early October, which occurs. There is no reason for price to come back up since all indicators were in negative divergence in Q4; it was over. The only thing that can change this scenario is news that is not yet priced-in.
Bingo. As the 2019 year begins, the PBOC, Fed, ECB, BOJ and other central bankers collude to save the global stock markets. The corrupt central bankers pledge to print easy money forever and voila, stocks rocket launch higher. The Shanghai Index, SSEC, pops the strongest since the PBOC, China's central bank, provided the most Keynesian candy (cutting triple R's and other providing other stimulus). The central bankers are the market.
So XLK launches higher on the central banker easy money and the promise of a US-China trade deal keeps the party going into springtime in the northern hemisphere. It's nice for the wealthy elite class, that own large stock portfolios, to receive another stock market rally to further increase their riches. However, the chart is not painting a happy picture.
A double-top, or M-top is in play. The chart indicators remain in negative divergence. The rally does not have staying power. The stochastics are now overbot. The RSI is close to overbot. Note the volume candlesticks (brown circle). The selling was strong and fierce in Q4 on the downside while this rally in Q1 is on timid volume, not exactly a ringing endorsement of further upside.
XLK printed 76.26 on Friday, the record high, with the upper standard deviation band at 77.17 only a whisker away. XLK may tag this 77-78 range this month (April) but the chart forecasts another epic top. Price should peak out this month and then trend lower for the months and perhaps year or two ahead. Play accordingly.
It is interesting that Wall Street pundits tout technology companies as the easy guaranteed win going forward; the chart above says they are all wrong. Keystone does not have a position in XLK right now but will play it on the short side going forward (likely moving in and out) for the rest of the year. Technology is printing a major multi-month and perhaps multi-year top. The Silicon Valley party is over. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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