Are tech stocks about to run into trouble?
The NASDAQ 100, which is composed of heavy-hitting technology companies to the likes of Apple, Microsoft and Google, has had quite a run this year, up around 9 percent. But Miller Tabak’s Matt Maley sees cause for concern.
“The rally in the NASDAQ 100 looks like it could be forming a potential head and shoulders pattern,” he said, noting that the pattern tends to indicate a reversal in trend. “Right now the right shoulder of the head and shoulders pattern is just beginning to form. It could still break to new highs. But with the weakness in the semiconductor stocks, which have been a good leader for the index for many years, that makes me think there’s a good chance we could test the neckline [of the head and shoulders pattern] sometime in the next week or two.”
A test to the neckline of the head and shoulders pattern would bring the NASDAQ 100 around 1 percent lower, a buying opportunity according to Oppenheimer’s Andrew Burkly.
“It’s paid to buy the pullbacks for the past two years,” he said, pointing out that the pattern could fail, negating the bearish calls. “We think this is an offensive growth area.”
Burkly reiterated his bullishness for the overall market, and tech in particular. “Fundamentally, we like tech. We like large cap over small cap so, we think NASDAQ 100 is a good way to play it.”
Check out the video above for the full discussion on Tuesday’s episode of CNBC’s “Street Signs.”