The coronavirus pandemic has put many of the world’s largest technology companies into the spotlight due to surge in demand for services as many workflows shift online. While sharp sell-offs across many asset classes has investors concerned about a trend reversal, active traders who utilize trend trading techniques are turning to long-term charts for a broader perspective. In this article, we’ll take a look at weekly charts used to track the state of global tech stocks and try to determine how trend traders will look to position themselves over the months ahead.
iShares Global Tech ETF (IXN)
Most trend traders who want to get the sense of where a specific global market segment is headed often turn to exchange-traded products such as the iShares Global Tech ETF (IXN). Taking a look at the weekly chart below, you can see that the price of the fund has fallen toward the long-term support of an influential trendline and its 200-week moving average. The momentum of the underlying uptrend is still well intact, and it looks as though the recent pullback has created an interesting buying opportunity for those with a long-term perspective.
Microsoft Corporation (MSFT)
With a weighting of 17.88%, Microsoft Corporation (MSFT) represents the top holding in the IXN portfolio. Taking a look at the five-year weekly chart below, you can see that the price of the stock has been trading within a well-defined channel pattern. The recent bounce off of the lower support level will likely be used as confirmation that the bulls are in control of the momentum, and traders would expect the uptrend to continue until the price makes several consecutive closes below the lower trendline.
Visa Inc. (V)
Another company focused on technology, specifically the digital transformation of financial services, is Visa Inc. (V). As a world leader in facilitating electronic funds transfers, Visa is well positioned to continue to benefit from the shift to electronic payments. As you can see from the weekly chart below, the price of Visa stock has been trading along an extremely strong uptrend, which has provided support on many pullbacks over the past 7.5 years. The recent bounce off of the support levels suggests that the bulls are still in control of the momentum and that prices could be poised to continue the run higher.
The Bottom Line
Global technology is one of the major sectors that has captured the spotlight of long-term trend traders over the past several weeks. Based on the weekly charts shown above, it is clear that the underlying uptrend is still in place and that the nearby support could act as a catalyst for a continued move higher.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.