Without a doubt, the Tech sector has outperformed all other ten, being almost solely responsible for advancing the broader market’s recovery amid analyst expectations of a -20% earnings decline in S&P 500 companies this coming Q3 earnings season.
Among the six industries in tech, software, hardware, and semiconductors are in the lead. The Philadelphia Semiconductor Index (SOX) is on the heels of the Nasdaq 100, and far outperforming the S&P 500. The story here is remote and streaming technologies, and of course the little chips needed to power them.
XLK momentum appears to be technically slowing. FactSet sees Q3 earnings decline of around -2% for the sector. But again, look for earnings blowouts among companies offering cloud, remote and gaming technologies. A drop below the 108 level may cancel “short-term” uptrend bias, but it has plenty of space to fall (the 90 range) before the trend reverses.
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