The Technology Select Sector SPDR Fund (XLK) has experienced a 6% decline this month due to concerns about the health of the U.S. economy. The fund, which significantly increased its position in Nvidia and reduced its position in Apple in June, has been impacted by the recent downturn in technology stocks. Let’s take a closer look at the technical analysis of XLK’s chart and identify important price levels that investors should be watching.
Fund Reclaims 200-Day Moving Average
Since reaching its record high in early July, the price of XLK has fallen by as much as 20% as investors booked profits in mega-cap tech stocks. During last Monday’s global selling rout, the fund broke below the closely watched 200-day moving average (MA). However, it managed to stage a recovery and reclaim the indicator by Thursday’s market close.
Support Levels to Watch
Investors should monitor two key support levels on XLK’s chart. The first support area sits around $200, just below the 200-day MA. This level is significant as it represents a psychological round number and a minor peak that formed during the fund’s trending move between April and July. If the price fails to hold this level, it could revisit lower support at $194. This area is marked by a horizontal line connecting the December 2023 swing high with comparable lows in April and August. It is also in close proximity to an uptrend line stretching back to the October 2022 low.
Resistance Levels to Monitor
On the upside, XLK’s price may encounter resistance near $210. This level is where sellers could look to take profits, as it is marked by a trendline that connects a period of March consolidation with a minor June pullback and the August 1 pre-gap trading level. If the bullish momentum continues, the fund’s price could move towards $218. This area may find resistance around the May peak and the daily high of several trading sessions in late July and early August. It is also just below the downward sloping 50-day MA.
Conclusion
XLK’s recent performance has been impacted by concerns about the U.S. economy and the rebalancing of its portfolio in June. The fund’s price has fallen from its record high, but it managed to reclaim the 200-day MA after breaking below it during a global selling rout. Investors should monitor key support levels at $200 and $194, as well as resistance levels at $210 and $218. By keeping an eye on these price levels, investors can make informed decisions about their investments in XLK.
Disclaimer: The comments, opinions, and analyses expressed in this article are for informational purposes only and should not be considered investment advice. The author does not own any of the securities mentioned in this article.
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