{"id":194779,"date":"2023-08-14T02:24:37","date_gmt":"2023-08-14T06:24:37","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=194779"},"modified":"2024-01-24T12:12:51","modified_gmt":"2024-01-24T17:12:51","slug":"chart-advisor-tech-underperforms","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-tech-underperforms\/","title":{"rendered":"Chart Advisor: Tech Underperforms"},"content":{"rendered":"\n<p>By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=f5893788815049588d27b705e201a047&amp;_e=-JlyV5lT66Ezsim8GwryBKeoHvF8yIrqN369sNPdMCRo5gpSt9IIF788slNEcxJdQ2_-JZiqRUeilGKX4EVWmIqCdLHA-4UKjJcIQGl9sZyooZ40i_ot5LySpbKaqsLz0YL0dg9NABCK-Ug0q_vRyah6wweVikV1yY0Eg25kWdnlFflVpMIZ71bdbdEaO9TImxNNv9lByj-UCebvEvnEN5fXuYueynqkgJKOp4A-Wg8Cdg_zBT08fRprEnAk3kn-J4D1LYLivmK3oqIBSvmSYOAiDKlnawtuAWhk5dOU0TGTVtWEcaUfWMKACGRWmukul-24jvaz5SxFr2fXFOdSKsrS_YD-asTGzNn22rsQ-mTjfxzRtSMNv04CQd43-DMor8c8rVlAiZdpMA946n57zxJqRbT5BYGZpAUb4OVwETNK8M94B1fKFwDFfjj6_OUWgpZM2u6QdAFlg-INojBpdA%3D%3D\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=f5893788815049588d27b705e201a047&amp;_e=-JlyV5lT66Ezsim8GwryBNeUvYwpSHZhg2b1eHS9S6unMPdr3dagEf2ShHj6V2EdyGsSdy7vPlETEYJuxD8bdyaRXhggdFR_L1K9DwHh2CyC4BN0AfBT3bpJcdEQbn9uMeMiFUMrTMzOpNn6_uIVI45ZXa7bg562jBrfhzbXIJzVWkVqhBQI3Hp92nsLALWsoKqEOm8hxaxCX7ZdW9jWuUIfCuJ4-c3lfW33yt8b04qXAxozXTfLYyjxmwE9_MnlaheeZo0cFzr5hHX0F3rAjCpxb4bTgLW1y5NdFOSjEBGpgwyE-jaihykf5ZDfD1GTZUO4GsDw0Zp2qExJ89aRl7zG9hzcxf5KuPMWPg6bunoWa8252Q4dj9gf9nOMOZLS7LpYrkSgxLNCIbiog4QdBKwlGxuQDyAwaPGePROb2-_PjtRT97XZyEA0Wsejlkv3\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/p>\n\n\n\n<p><strong>1\/ Tech Underperforms<\/strong><\/p>\n\n\n\n<p><strong>2\/ The Median Stock Reaches a Critical Level<\/strong><\/p>\n\n\n\n<p><strong>3\/ Will Commodities Follow Energy\u2019s Lead?<\/strong><\/p>\n\n\n\n<p><strong>4\/ Tracking Copper<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-tech-underperforms\">1\/ <strong>Tech Underperforms<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/articles\/stocks\/10\/primer-on-the-tech-industry.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">Technology stocks<\/a>&nbsp;have halted their advance as they ran into&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">resistance<\/a>&nbsp;a few weeks ago.<\/p>\n\n\n\n<p>Not only are we seeing corrective action on absolute terms, but on a relative basis, tech is slowing down versus the overall market.<\/p>\n\n\n\n<p>The chart below of the Equal Weight Technology Sector (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=rspt&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">RSPT<\/a>) vs. the Equal Weight S&amp;P 500 (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=rsp&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">RSP<\/a>) illustrates this theme:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/1-15-1100x541.png\" alt=\"\" class=\"wp-image-194780 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>As you can see, the RSPT\/RSP ratio failed to break above a critical level of overhead supply as sellers showed up at a shelf of former highs.<\/p>\n\n\n\n<p>A&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/breakout.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">breakout<\/a>&nbsp;above this resistance area would signify a new era of outperformance for tech.<\/p>\n\n\n\n<p>However, if this ratio remains stuck in this range, we could see tech underperform and other areas of the market take the lead.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-the-median-stock-reaches-a-critical-level\">2\/ <strong>The Median Stock Reaches a Critical Level<\/strong><\/h2>\n\n\n\n<p>In healthy bull markets, stocks tend to outperform their alternatives.<\/p>\n\n\n\n<p>We like to use ratio charts to determine which&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/a\/assetclasses.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">asset classes<\/a>&nbsp;outperform and which are underperforming.<\/p>\n\n\n\n<p>Check out the&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/stocks\/12\/value-line-investment-survey.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">Value Line Geometric Index<\/a>&nbsp;(VLG) vs.&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/investing\/073113\/introduction-treasury-securities.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Treasuries<\/a>&nbsp;(<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=tlt&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">TLT<\/a>) ratio pressing against the 2007 highs:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/2-9-1100x541.png\" alt=\"\" class=\"wp-image-194781 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>A decisive breakout from this monster base would indicate that the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/a\/alpha.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">alpha<\/a>&nbsp;will be in the stock market, favoring equities over their alternatives for the foreseeable future.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-will-commodities-follow-energy-s-lead\">3\/ <strong>Will Commodities Follow Energy\u2019s Lead?<\/strong><\/h2>\n\n\n\n<p>Energy contracts are breaking out.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/c\/crude-oil.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">Crude oil<\/a>&nbsp;and gasoline futures are completing major reversal patterns. Heating oil is ripping higher.&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/fundamental-analysis\/12\/natural-gas-primer.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">Natural gas<\/a>&nbsp;has traders on the edge of their seats (what\u2019s new?) as it heads into a seasonally favorable stretch.<\/p>\n\n\n\n<p>But what about the rest of the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/commodity.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">commodity<\/a>&nbsp;space?<\/p>\n\n\n\n<p>Check out the overlay chart of our equal-weight energy index and our equal-weight broad commodity index:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/3-9-1100x561.png\" alt=\"\" class=\"wp-image-194782 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>Both averages have followed the same path since the 2020 lows despite a mere 15% weighting toward energy in our broad commodity index.<\/p>\n\n\n\n<p>But energy is pulling away. Oil and gas names are taking on a leadership role among U.S. equities as their underlying commodities confirm by digging in and resolving higher.<\/p>\n\n\n\n<p>If there was ever a time and place for the broader commodity complex to catch higher, this is it!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-tracking-copper\">4\/ <strong>Tracking Copper<\/strong><\/h2>\n\n\n\n<p>If the commodity complex is catching higher along with crude and the gang, they\u2019re not doing it without&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/doctor-copper.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">Dr. Copper<\/a>.<\/p>\n\n\n\n<p>Copper&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/futures.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9954031-20230814&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081423\" target=\"_blank\" rel=\"noreferrer noopener\">futures<\/a>&nbsp;are a sweeping indication of global economic health and demand for base and industrial metals.<\/p>\n\n\n\n<p>Check out copper stuck below a critical polarity zone:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/4-8-1100x561.png\" alt=\"\" class=\"wp-image-194783 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>If copper prices remain below this key level, it could raise questions about the resilience of the overall world economy and suggest a more difficult path higher for the broader commodities market.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 11th August 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Technology stocks have halted their advance as they ran into resistance a few weeks ago. <\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,15,17,18,6,9,22,23,26,3],"tags":[15790,7268,6609,13009],"contributors-categories":[13686],"class_list":{"0":"post-194779","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-fixed-income","9":"category-futures","10":"category-macro","11":"category-north-america","12":"category-securities","13":"category-stocks","14":"category-technical-analysis","15":"category-text-articles","16":"category-traders-insight","17":"tag-cmdy","18":"tag-rsp","19":"tag-tlt","20":"tag-vlg","21":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium 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