Monday was a wild one for Technology stocks and the NASDAQ Composite NASD and NASDAQ-100 NDX Indices as both traded more than 2.5% off their Friday closes intraday Monday. As of the time of this writing, both indices have rebounded Tuesday and rallied more than 1%, but that doesn’t quite tell the whole story. Intraday Monday, Technology subsector ETFs like the iShares North American Tech-Software ETF IGV, the First Trust Dow Jones Internet Index Fund FDN, and the SDPR S&P Semiconductors ETF XSD were all down more than 3% at their intraday lows Monday, with XSD being down almost 4%. On a year-to-date basis in 2022, the DWA Group indices for the Internet DWAINET, Semiconductors DWASEMI, and Software DWASOFT sectors are all down more than -6% and are the second, third, and fourth-worst performing DWA Group Indices during the month of January.
But even with the rally Tuesday and both charts moving back into a column of X’s, Monday’s action caused material changes to the long-term 100-point per box charts of NASD and NDX. On the 100-point per box chart of NASD, the index broke a double bottom on Monday at $14800 to return to a sell signal before falling to $14,600 and violating the bullish support line. This trendline break is the first break on the 100-point per box chart since March of 2010! Prior to yesterday’s trendline violation, the only other time the bullish support line was tested was in March of 2020. With Tuesday’s action, NASD reversed back into a column of X’s to $15,100.
In the case of the long-term 100-point per box chart of NDX, the Index broke a spread triple bottom at $15500 on Monday to return to a sell signal before it fell to $15,200 and violated the bullish support line. The trendline break is the first since April of 2010, a similar timeframe as the NASDAQ Composite. Prior to yesterday’s bullish support line violation, the only other times NDX tested its trendline was in March of 2020 and May of 2021. During Tuesday’s intraday action, NDX reversed back into a column of X’s at $15,800.
In both cases, the trendline violations on the 100-point per box charts of NASD and NDX are extremely notable for the technology-heavy indices and change the trend on the charts for the first time in more than a decade. There is quite the divergence within broader technology and within tech-indices like the NASDAQ Composite and NASDAQ-100, and we’ll look to discuss that within today’s ETF Spotlight.
