SXLK: time to take profit
The ETF SXLK has been providing an easy access to the US big techs for the European investors, allowing us to piggyback the insane bull run over the past few quarters.
However in the recent weeks, it's showing some weakness. While the (5) waves up off the March 2021 low looks complete, the daily RSI shows an downward trend.
Above all, the weekly RSI and stochastic is leaving the overbought zone, indicating an exhaustion of the rally. When was last time that this happened? It was the covid crash in 2020.
I'm aware of the small sample size due to the rather short existence of the SXLK, but I'm certainly willing to pay attention to it.
tradingview.com/x/Ax9xWUzf/
If you take a close look at the XLK, the American OG of the SXLK; top two constituents AAPL and MSFT have signaled potential multiple top, while number 3 NVDA is already in a downward channel.
As those three have a combined weighting of about 50% in the XLK, when they head into correction phase, so will the SXLK do.
Currently I'm eyeing 66-69 as initial correction target, that is the retracement range of wave (4), and the volume wedge around 67 on the daily should also provide some support.
The bounce of yesterday 12-Jan provides an exit opportunity, it's prudent to reduce exposure and/or buy protective puts.
Let me be clear that the aforementioned are well run companies, and AAPL and MSFT also pay dividends and buy back shares.
Long term I'm not bearish for them, in the short term however, I doubt the high multiples are still justified by the growth.
I generally do not track US stocks closely and I prefer using ETF for exposures in the foreign markets, so DYOR.
And maybe show some love for the European cyclicals/values?
However in the recent weeks, it's showing some weakness. While the (5) waves up off the March 2021 low looks complete, the daily RSI shows an downward trend.
Above all, the weekly RSI and stochastic is leaving the overbought zone, indicating an exhaustion of the rally. When was last time that this happened? It was the covid crash in 2020.
I'm aware of the small sample size due to the rather short existence of the SXLK, but I'm certainly willing to pay attention to it.
tradingview.com/x/Ax9xWUzf/
If you take a close look at the XLK, the American OG of the SXLK; top two constituents AAPL and MSFT have signaled potential multiple top, while number 3 NVDA is already in a downward channel.
As those three have a combined weighting of about 50% in the XLK, when they head into correction phase, so will the SXLK do.
Currently I'm eyeing 66-69 as initial correction target, that is the retracement range of wave (4), and the volume wedge around 67 on the daily should also provide some support.
The bounce of yesterday 12-Jan provides an exit opportunity, it's prudent to reduce exposure and/or buy protective puts.
Let me be clear that the aforementioned are well run companies, and AAPL and MSFT also pay dividends and buy back shares.
Long term I'm not bearish for them, in the short term however, I doubt the high multiples are still justified by the growth.
I generally do not track US stocks closely and I prefer using ETF for exposures in the foreign markets, so DYOR.
And maybe show some love for the European cyclicals/values?
Trade closed: target reached:
Even overshot the target, happy to close.
With the daily RSI above the downward trend line and the blowout earnings of Google and AMD, it becomes interesting whether SXLK can recover more than 0.764 of the correction ~78 in the next few sessions: if not, one more leg down is highly likely.
tradingview.com/x/DZA9XvTI/