Technology stocks are trying to recover, but a report from Goldman Sachs highlights the selling pressure behind last week’s decline and that may put a limit to the gains. .
According to Goldman’s prime brokerage data, hedge funds cut technology positions at the fastest pace in at least a decade during the five trading sessions through October 15. Semiconductors saw the largest dollar amount of selling. Despite that reduction, technology exposure remains elevated, with net allocation still in the 90th percentile compared with the past five years.
That leaves traders with a question: Has the selling cleared the way for a recovery, or will hedge funds use a rebound to reduce exposure further?
That is where the technicals come into play. The Goldman report helps explain the pressure, but the charts help define the risk. Are buyers taking back control, or is the bounce running into resistance that keeps sellers in play?
In the video above, I take a look at some of the large cap technical stocks including Microsoft, Nvidia, Amazon and Apple, outlining the key levels buyers need to reclaim—and hold—to give the recovery more credibility.
This article was written by Greg Michalowski at investinglive.com.