Technology stocks and the corresponding exchange traded funds, including the Technology Select Sector SPDR Fund (NYSEArca: XLK), were market leaders on the upside. That trend sharply reversed as technology is leading broader markets lower in the fourth quarter.
XLK’s fourth-quarter loss is north of 14% and some market observers believe the worst is not over for technology, the largest sector weight in the S&P 500.
“The Nasdaq remains in correction territory and is off 2 percent this year. It’s on track to see its worst quarter in a decade. Tech bellwethers such as Apple and Alphabet have plunged 27 percent and 15 percent, respectively, this quarter,” reports CNBC.
Well-known tech investor Paul Meeks “sees more trouble ahead for the tech-dominated Nasdaq. He predicts it could be several weeks before it bottoms,” according to CNBC.
XLK, the largest tech ETF by assets, entered Tuesday almost 16% below its 52-week high and 8.52% below its 200-day moving average.
For advanced traders, profits can be had playing both sides of tech, strength or weakness, via the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL) and Direxion Daily Technology Bear 3X ETF (NYSEArca: TECS).
TECS seeks daily investment results worth 300% of the inverse of the daily performance within the Technology Select Sector Index. To accomplish this, TECS invests in swap agreements, futures contracts, short positions or other financial instruments thatprovide inverse or short-leveraged exposure to the index.