Conclusion, Investment Implications, Strategy
The Technology Select Sector SPDR Fund (XLK) appears to be resuming its larger 2020 advance following 2 months of sideways investor indecision. A sustained rise above the 120.85 area would help confirm this and target an additional 13% rise to 138.50 per share. This is an Asbury Momentum trade idea.
Analysis and Rationale
The Technology Select Sector SPDR Fund (XLK) seeks investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in the Technology Select Sector Index. In seeking to track the performance of the index, the fund employs a replication strategy, which means that the fund typically invests in substantially all of the securities represented in the index in approximately the same proportions as the index. It generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The fund is non-diversified.
Chart 1 below plots XLK daily since May, showing that it appears to be resuming its 2020 major uptrend by edging back above the upper boundary of 2 months of sideways investor indecision, currently situated at 120.85. A sustained rise above 120.85 would help confirm this and target an additional 13% rise to 138.50.
Chart 1
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the 117.49 area, a long entry price of 122.14 would provide a 1:3.5 risk/reward ratio (risking $1.00 to make $3.50) with an initial risk of 3.8%.
Table 1
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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.