XLK Monthly: VPA Anomalies Show the Tech Rally Was Built on Sand
XLK Monthly: VPA Anomalies Show the Tech Rally Was Built on Sand
XLK is the State Street Technology Select Sector SPDR ETF. It tracks the technology sector of the S&P 500 and is heavily concentrated in a few mega-cap names. The top three holdings — typically NVIDIA, Apple and Microsoft — usually account for around 40% of the fund, while the top 10 make up roughly 65%. When you analyse XLK, you are largely analysing the price behaviour of the biggest technology stocks. You can read any chart with volume and price. On the monthly timeframe for XLK, the anomalies are glaring and simply confirm what many of us suspected and commented on at the time: the tech rally was built on sand. The hard evidence is sitting right there in the ETF itself.
The Candles That Tell the Story
Look first at the two candles of September and October last year (red arrows). These show the kind of action we expect in...