This article was originally published on ETFTrends.com.
Technology stocks and the corresponding exchange traded funds, including the Technology Select Sector SPDR Fund (XLK) , were market leaders on the upside. That trend sharply reversed as technology is leading broader markets lower in the fourth quarter.
XLK's fourth-quarter loss is north of 14% and some market observers believe the worst is not over for technology, the largest sector weight in the S&P 500.
“The Nasdaq remains in correction territory and is off 2 percent this year. It's on track to see its worst quarter in a decade. Tech bellwethers such as Apple and Alphabet have plunged 27 percent and 15 percent, respectively, this quarter,” reports CNBC.
Well-known tech investor Paul Meeks “sees more trouble ahead for the tech-dominated Nasdaq. He predicts it could be several weeks before it bottoms,” according to CNBC.
XLK, the largest tech ETF by assets, entered Tuesday almost 16% below its 52-week high and 8.52% below its 200-day moving average.
TECS seeks daily investment results worth 300% of the inverse of the daily performance within the Technology Select Sector Index. To accomplish this, TECS invests in swap agreements, futures contracts, short positions or other financial instruments thatprovide inverse or short-leveraged exposure to the index.
TECL seeks daily investment results equal to 300% of the daily performance of the Technology Select Sector Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
Bullish investors may want to steer clear of tech stocks until the new year arrives.
Meeks “believes the prognosis is solid for tech stocks next year — suggesting the group could begin its ascent in late January when quarterly earnings season begins,” reports CNBC.
For more market trends in technology, click here.
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