Key industry group ETFs within the technology sector are leading the market. This shows a healthy appetite for risk and bodes well for the economy. The PerfChart below shows one-month performance for the S&P 500 ETF (SPY) and six tech-related ETFs. The Nasdaq 100 ETF and the Nasdaq 100 Equal-Weight ETF (QQEW) are outperforming SPY by a two to one margin. The Biotech iShares (IBB), which represents some of the riskiest stocks in the market, is outperforming the broader market by 3 to 1. The Semiconductor SPDR (XSD), which represents the cyclical semiconductor group, is also outperforming SPY by a three to one margin. Relative strength in these tech-related ETFs is positive for the market as we head into 2014.
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The next chart group shows CandleGlance charts for these tech-related ETFs. Notice that the FirstTrust Internet ETF (FDN), XSD, QQQ and QQEW hit new highs last week. IBB did not hit a new high last week, but hit a new high in late November and held broken resistance with a surge above 220. The Networking iShares (IGN) was the laggard of the group, but this ETF caught fire last week and broke above the September trend line. Basically, there is broad underlying strength in the tech sector and traders should look for bullish setups within these groups as we head into 2014.
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Happy Holidays! -- Arthur Hill CMT
