Tech bouncing right at support the past two days, but XLK will need to reclaim $175 for it to mean much pic.twitter.com/g3IP9PjlFA
— Scott Brown, CMT (@scottcharts) August 21, 2023
Today’s Chart of the Day was shared by Scott Brown (@scottcharts). Tech ($XLK) was the strongest sector last week, and it led again today. You wouldn’t expect to see tech leadership with yields breaking out to their highest in over a decade. It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). If it can continue rebounding off this level, the next task will be reclaiming the breakout level (around $175). On the other hand, failure to hold above $163 would open the door for another leg lower to the August 2022 highs (around $148). With the third-largest Tech stock ($NVDA) reporting on Wednesday, this could be a make-or-break week for the most important sector of the S&P 500.