Sector Macro View
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The Technology sector experienced a notable retreat on April 28, with the iShares Global Tech ETF (IXN) declining 1.81% to close at $118.83. This performance marked a significant underperformance compared to the broader SPDR S&P 500 ETF Trust (SPY), which saw a more modest decline of 0.49%. Technical analysis from Clear Signals indicated a bearish trend, momentum, and volume for the ETF, further supported by bearish divergences across its Relative Strength Index (RSI), Stochastic Oscillator, Money Flow Index (MFI), and Moving Average Convergence Divergence (MACD).
The sector's downturn occurred amid widespread anticipation for pivotal mega-cap earnings reports, as investors sought clarity on AI spending momentum. Major technology firms like Microsoft Corp and Apple Inc are set to report later in the week, with Microsoft's capital expenditure notably reaching $29.88 billion last quarter, an 89% year-over-year increase. Despite a recent "overweight" upgrade on U.S. equities by HSBC, sector breadth illustrated broad weakness, with only 7 advancing stocks against 26 declining stocks.
Top Movers Analysis
Despite the overall sector's struggles, IBM Common Stock advanced 2.19% to $233.04, buoyed by its involvement in the generative AI market. Apple Inc rose 1.16% to $270.71, and Microsoft Corp gained 1.04% to $429.25, both ahead of their critical earnings.
Conversely, semiconductor equipment manufacturers and chipmakers faced significant pressure. Applied Materials Inc declined 5.87% to $381.11, following commentary from Jim Cramer. KLA Corp lost 4.79% to $1808.97, primarily due to technical factors. Broadcom Inc dropped 4.39% to $399.83 amid concerns about chipmakers being "overextended," while Oracle Corp declined 4.05% to $165.96, and Micron Technology Inc retreated 3.86% to $504.29.
Key Levels and Technical Outlook
The iShares Global Tech ETF (IXN) closed at $118.83, below its 50-day Simple Moving Average of $105.33, signaling a bearish near-term trend. Clear Signals' analysis suggests a mildly bearish technical posture, with support levels at $94.41 (S1) and $93.05 (S2), and resistance at $97.82 (R1) and $99.87 (R2). Bearish divergences across key momentum indicators indicate potential for continued downside pressure. This technical weakness, combined with impending mega-cap earnings, suggests potential volatility for the sector.