Technology (XLK) has clearly been leading the SPX higher, but it is now very overbought. The RSI has now entered shaded overbought territory. We haven’t seen price this overbought since the crash at the beginning of September. In September, price was accelerating its ascent, just as it is now. Note that the rising bottoms trendline is getting more steep. The PMO is getting overbought, albeit not as overbought as September. The problem I have is the small cracks in the indicators. The BPI nearly had a negative crossover today. The SCI topped today and you can see that participation is beginning to turn down, even as price continues higher on a steep rising bottoms trendline.
Conclusion: I’m not saying it’s over for XLK, I’m just noting that indicators are not confirming this new all-time high. Could be dangerous. Don’t miss our special below if you haven’t subscribed yet!
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Erin Swenlin is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master’s degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor’s degree in Mathematics from the University of Southern California.