Sunday, March 23, 2008

WTF Among the Technology Stocks?

This is the last of eight S&P 500 sectors that I'm reviewing for money flows. The recent posts in the series include Materials, Industrials, Consumer Discretionary, Consumer Staples, Energy, Healthcare, and Financial stocks. Here we're examining five highly weighted Technology issues, with Cumulative Money Flow (top chart) and Five-Day Average Flows (bottom chart) plotted against the XLK (Technology) ETF. The five stocks included in the calculations are MSFT, INTC, IBM, CSCO, and VZ.

We can see that the Technology sector, like Financials and Healthcare, has shown recent relative weakness, breaking below its January price lows. Nevertheless, we haven't seen new lows in Cumulative Money Flow, suggesting some drying up of selling during the recent decline.

The lessened selling, however, has not translated into aggressive buying. We are only modestly off the recent price lows, and five-day money flows have remained negative. As with so many of the other sectors, we've yet to see sustained buying interest that would lead us to expect a major change of trend.