Week 16 Technology Trending and Performance

There are 21 “color” changes from green to amber in the picture below. That may not look like a lot in the picture but actually constitutes 19% of all the cells. That is a lot. And while these changes may reverse back to green to indicate bullishness, the chances of that in the near term are low.

Trending Heat Map ETFs (with changes highlighted)

For me this is big and important. While we keep thinking that nothing is happening in the markets, due to the low volatility (measured by the VIX), we may be missing a slow downturn forming. Usually, downturns are quick and abrupt and culminate in big moves taking the market down several percentage points on a daily basis. We do not see that now and may be missing the slow drip.

That is why I plot this picture every week as it gives me a sense of the moves when they are not exactly noticeable.

For instance, I have been short the SMH and KWEB for a couple of weeks now. Both of these have been somewhat of high-flyers this year but started showing their weakness few weeks back. This week also they lost ground and now are strongly bearish.

All this does not mean that things cannot reverse from here. They certainly can and my trending map will pick it up if they do.

Trending Heat Map (Big Tech)

AAPL and CRM continue to trend perfectly bullish. Most others retreating somewhat.

Performance ETFs

I removed January but we know that was an up month. So, we really have had swinging up/down months so far (assuming April remains down through the end of the month). The net result though is that the tech sector is up quite a bit for this year so far. In other words, the up months have been up much bigger than the down months have been down. Most are still down over a 1-year period though.

I remain short SMH and KWEB as of now. These 2 are among the worst performers in April. I am also short QQQ (small position) as of now.

Performance Big Tech

Only 4 out of the 18 I track have positive returns so far for April. The year-to-date returns are still looking very good for the most part. But that is history. I am more interested in what the stocks are doing now so as to get an indication what they may do in the near future.

TSLA has been on a roller-coaster. While it is up big this year so far, the recent downturn has been severe. And over 1-year it is down over -50%. I do not usually trade individual stocks. But I could not stop myself shorting TSLA. I am still short.

The bullish trend seems to be weakening in the tech sector. We have big earnings announcements coming up next week. So, that is a chance for things to go back to good. I do think the chances are low though.