Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chart Of The Day: Been Waiting For A Tech Sector Buying Dip? It's Likely Here

By Investing.com (Pinchas Cohen/Investing.com)Stock MarketsJul 19, 2021 15:39
ng.investing.com/analysis/chart-of-the-day-been-waiting-for-a-tech-sector-buying-dip-its-likely-here-82762
Chart Of The Day: Been Waiting For A Tech Sector Buying Dip? It's Likely Here
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 19, 2021 15:39
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The NASDAQ Composite fell 0.8% on Friday, extending the tech-heavy index's weekly loss to almost 2%. We don't see it as the start of a downturn however, rather, as a return move within an uptrend.

The re-escalating pandemic and rising inflation keep driving the market narrative—as well as current selloffs. That's surprising, in our view.

In the past, investors cheered each time economic data disappointed, seeing it as a catalyst for additional dovish fiscal policy from the Fed which would include ongoing stimulus. On Friday, however, markets were sold off after consumer sentiment data showed inflation might become a disruptive force within a delicate recovery, even moreso after Fed Chair Jerome Powell said the economic growth thus far does not warrant removing accommodation.

We're not sure if this is just a fluke or an actual paradigm shift. Only time will tell.

Whatever it may be, either environment could favor technology stocks. On the one hand, the ongoing virus spread is keeping the global economy from re-opening, which has already proven to be beneficial for technology firms, which helped enable lockdown protocols in lieu of direct human interaction. On the other hand, a selloff in tech shares would counter concerns over their escalating valuations amid rising inflation and attract dip buyers.

That dynamic is visible on the technical chart.

COMPQ Weekly
COMPQ Weekly

On Friday, the NASDAQ Composite completed an Evening Star, whose star is an imperfect Hanging Man (upper shadow). That three-day bearish pattern suggests a pullback though not necessarily a reversal.

Although the RSI provided a negative divergence to the rising price, the volume demonstrates that the recent green days had much more participation than the red days.

That demonstrates the force is with the recent ascending triangle. Thus, a return-move is due after the breakout, which will test the support of the triangle. If found holding, its presumed waiting demand will be the technical catalyst for another leg higher.

Trading Strategies

Conservative traders should wait for the triangle to prove itself, with a rebound that takes out the Evening Star.

Moderate traders would probably buy on the dip.

Aggressive traders could enter a short, riding the weekly Evening Star’s impetus, then buy the dip. Money management is crucial. Here’s an example:

Trade Sample – Aggressive Short

  • Entry: 14,725
  • Stop-Loss: 14,825
  • Risk: 100 points
  • Target: 14,225
  • Reward: 500 points
  • Risk:Reward Ratio: 1:5
Chart Of The Day: Been Waiting For A Tech Sector Buying Dip? It's Likely Here
 

Related Articles

Chart Of The Day: Been Waiting For A Tech Sector Buying Dip? It's Likely Here

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email