The coronavirus pandemic has brought to light many of the world’s largest technology companies due to the surge in demand for services, as many workflows are moving online. While massive sales in many asset classes worry investors about a trend reversal, active traders who use trend trading techniques are turning to long-term charts for a broader perspective. In this article, we are going to take a look at the weekly charts used to track the state of global tech stocks and try to determine how trend traders will position themselves over the next few months.
IShares Global Tech ETF (IXN)
Most trend traders who want to know where a specific global market segment is headed often turn to exchange traded products such as the iShares Global Tech ETF (IXN). Looking at the weekly chart below, you can see that the price of the fund has dropped towards the long term support of an influential trend line and its 200 week moving average. The momentum of the underlying uptrend is still very much intact, and it seems that the recent pullback has created an attractive buying opportunity for those with a long-term outlook.
Microsoft Corporation (MSFT)
With a weighting of 17.88%, Microsoft Corporation (MSFT) represents the first position in the IXN portfolio. By taking a look at the weekly five-year chart below, you can see that the stock price is traded according to a well-defined channel model. The recent rebound in the lower support level will likely be used to confirm that the bulls are controlling momentum, and traders would expect the uptrend to continue until the price makes several consecutive closings below the lower trend line.
Visa Inc. (V)
Visa Inc. (V) is another technology-driven company, in particular the digital transformation of financial services. As a world leader in facilitating electronic funds transfers, Visa is well positioned to continue to benefit from the transition to electronic payments. As you can see from the weekly chart below, the price of Visa shares is trending in an extremely strong uptrend, which has supported many withdrawals in the past 7.5 years. The recent rebound in support levels suggests that the bulls are still in control of the momentum and that prices may be ready to continue rising.
The Bottom Line
Global technology is one of the main areas that has caught the attention of long-term trend traders in recent weeks. Based on the weekly charts presented above, it is clear that the underlying uptrend is still in place and that the neighboring support could act as a catalyst for a continuous upward movement.
At the time of writing, Casey Murphy had no positions in any of the assets mentioned.