This key part of the stock market could be headed for a meaningful breakout
The Technology Select SPDR (XLK) has an opportunity to turn a bounce into a more meaningful breakout, says Frank Cappelleri.
TL;DR
- The Technology Select SPDR (XLK) shows developing inverse head-and-shoulders and bullish handle patterns.
- A sustained breakout in XLK could lead to a potential target near $216.
- Technology's rebound is supporting the SPX's upward trend and its own inverse head-and-shoulders pattern.
- The equal-weight S&P 500 ETF (RSP) is weakening, forming a potential bearish head-and-shoulders pattern.
- The market's direction hinges on whether XLK's bullish patterns succeed, which could support RSP.
- Failure of XLK's patterns alongside deteriorating breadth would be concerning for RSP.