Technology Sector Thu 2025-03-20: 6.2 Strength Score (Unch)

Brian Degracia

20 Mar 2025 • 8 min read

TECHNOLOGY SECTOR UNCHANGED for the week ending 03/20/25. Four of five industries strengthened but enough to change rating (Computer Hardware, Computer Software & Services, Electronics, and Internet). Telecommunications leads at 5Average, Electronics lags at 7Weaker. An industry can NOT change strength rating yet still "strengthen" or "weaken" for the week because underneath the surface there can directional movement that isn't material enough to change the strength rating. Taken in the aggregate over the sub-industries that make up industries and then sectors, this can provide helpful insight into the underlying currents at each level.

Overview

This post consists of the following sections:

I. Key Background Information
II. Financial Sector Detailed Analysis

SECTION I: KEY BACKGROUND INFORMATION

Sector Weekly Summary

The Technology Sector was unchanged at a 6.2 composite score this week. Four of five industries strengthened but not enough to change rating.

Electronics (Chips/Semis) is the sector laggard at 7Weaker. Telecommunications leads the sector at 5Average.

Difference This vs. ETFs Analysis

Note this analysis is the same as that used for the SPDR ETFs published every Tuesday and Friday (here is Tuesday's report dated March 18, 2025) but the two main differences are:

1. Universe of stocks. The ETFs are the largest capitalization stocks, 500 of them in the 11 sector ETFs. In this analysis, there are approximately 2,700 stocks.
2. Sub-categorization below the market level. The ETF analysis with 500 stocks is limited to sector strengthening and weakening. This analysis with +/-2,700 stocks can be and is segregated into 29 industry groups and in turn 189 sub-industry groups.

There is a Communications ETF (symbol XLC) which is separate from the Technology ETF (symbol XLK). The Technology sector in this analysis includes Telecommunications with Computer Hardware, Computer Software & Services, Electronics (Chips/Semis), and Internet.

Per Tuesday's ETF strength analysis, XLC/Communications is rated 5Average (strengthened but not enough to change rating) and XLK/Technology is rated 6Weak (strengthened one rating). Notably, XLK is tied for weakest ETF with two other ETFs. Per this broader analysis today the Technology Sector is at a 6.2 strength rating.

March 18, 2025 strength ratings for the 11 SPDR ETFs show XLC/Communication Services at 5Average (strengthened but not enough to change rating) and XLK/Technology at 6Weak (strengthened one rating). XLK is tied with XLB/Materials, XLI/Industrial, and XLY/Consumer Discretionary as weakest of the 11 ETFs.

How would I interpret and use this information?

Recognizing that anything can happen at any time and I will never know the reason why until after the fact if ever, I am looking to give myself the best chances of an individual stock going my desired direction by stacking strength going long or stacking weakness going short, depending on strength/strengthening and weakness/weakening at the stock, sub-industry, industry, sector, and market levels. One quick way to discern this is to look at the differing market levels in terms of headwinds and tailwinds as noted below.

Current Market and Sector Environment: MIXED

MARKET = TAILWIND
The Market Strength Score changed to negative ("Risk ON") at +6% as of Friday, March 14, 2025.
SECTOR = Headwind/Neutral
The Technology sector was unchanged this week but is at a below-average 6.2 overall rating. If at all interested in positions in this sector, it is better to go where there is strength/strengthening - as reflected by price. This Stock Market Organizer methodology explicitly reveals this.

Current Industry/Sub-Industry Environment: Headwind/Neutral

Computer Hardware= Headwind/Neutral
6Weak, strengthened but not enough to change rating
Computer Software & Services = Headwind/Neutral
6Weak, strengthened but not enough to change rating
Electronics = Headwind/Neutral
7Weaker, strengthened but not enough to change rating
Internet = Headwind/Neutral
6Weak, strengthened but not enough to change rating
Telecommunications = Neutral
5Average, unchanged

Final Comments

There is absolutely no way of determining how long this environment will last. All one can do is find an objective way of measuring whether any given environment offers headwinds or tailwinds and then act accordingly based on these measurements.

This methodology measures what IS, acts accordingly based on objectively set rules, and never attempts to make predictions. As the market environment facts change based on systematic and repeatable measurement, then so do the appropriate actions.

Details are below shown in a manner not available elsewhere because I created it from scratch to continually answer this question: “Where is there strengthening and weakening in the market at the stock, sub-industry, industry, and sector levels?” Combine this with the top-down Market Strength Score and Sector Risk Gauge to get a key competitive advantage of understanding strength at every level. Why? Because the market does not have to be so complicated.

SECTION II: TECHNOLOGY SECTOR DETAILED ANALYSIS

Section Table of Contents

Introduction - Industry Components
INDUSTRY 1-Week Strengthening, Positive/Negative % Stocks
INDUSTRY 10-Week Strengthening
SUB-INDUSTRY 10-Week Strengthening
STOCKS Outliers: Strongest/Weakest Rated
STOCKS Outliers: 1-Week % Change
STOCKS Outliers: 5-Year Highs/Lows

1. Introduction - Industry Components

Computer Hardware

Largest of 6 sub-industries (29 stocks, average 5):
- Networking & Communication Dev (9 stocks)
- Computer Peripherals (9 stocks)

Top 10 Market Caps:
AAPL/Apple Inc, CSCO/Cisco Systems Inc, ANET/Arista Networks Inc, PANW/Palo Alto Networks Inc., HPQ/HP Inc, CDW/CDW Corporation, NTAP/Netapp Inc, SMCI/Super Micro Computer Inc, STX/Seagate Technology Holdings PLC, WDC/Western Digital Corp

Computer Software & Services

Largest of 8 sub-industries (169 stocks, average 21):
- Application Software (77 stocks)
- Business Computer Software & Services (41 stocks)
- Information Technology Services (23 stocks)

Top 10 Market Caps:
MSFT/Microsoft Corp, ORCL/Oracle Corp, CRM/Salesforce Inc, ACN/Accenture Ltd, ADBE/Adobe Systems Inc, IBM/International Business Machines Corporation, NOW/ServiceNow Inc, INTU/Intuit Inc, UBER/Uber Technologies, ADP/Automatic Data Processing

Electronics

Largest of 8 sub-industries (112 stocks, average 14):
- Semiconductor Equipment & Materials (22 stocks)
- Scientific & Technical Instruments (20 stocks)
- Diversified Electronics (19 stocks)
- Semiconductor - Integrated Circuits (14 stocks)

Top 10 Market Caps:
NVDA/NVIDIA Corporation, TSM/Taiwan Semiconductor Manufacturing Company Ltd. ADS, AVGO/Broadcom Inc, AMD/Advanced Micro Devices, TXN/Texas Instruments Inc, AMAT/Applied Materials Inc, ADI/Analog Devices Inc, MU/Micron Technology Inc, KLAC/KLA Corporation, INTC/Intel Corp

Internet

Largest of 3 sub-industries (37 stocks, average 12):
- Internet Information Providers (28 stocks)

Top 10 Market Caps:
GOOG/Alphabet Inc, META/Meta Platforms Inc, BKNG/Booking Holdings Inc, EQIX/Equinix Inc, DASH/DoorDash Inc, GIB/CGI Group Inc, PINS/Pinterest Inc, GDDY/GoDaddy Inc, ZM/Zoom Video Communications, EXPE/Expedia Inc

Telecommunications

Largest of 5 sub-industries (42 stocks, average 9):
- Communication Equipment (20 stocks)
- Wireless Communications (12 stocks)

Top 10 Market Caps:
TMUS/T-Mobile US Inc., VZ/Verizon Communications, QCOM/Qualcomm Inc, T/AT&T Inc, MSI/Motorola Solutions Inc, CCI/Crown Castle Intl Corp, LHX/L3Harris Technologies Inc, BCE/BCE Inc, ERIC/LM Ericsson Telephone Company, TU/Telus Corporation

2. INDUSTRY 1-Week Strengthening

Overview

What: A closer 1-week look at industry and sub-industry strengthening
Why: a multi-month rally begins with one up week. Meaningful moves last and can last longer than expected.

Positive/Negative % Stocks

While the positive/negative ratio was overwhelmingly positive, the underlying changes were not material enough to generate rating changes.

3. INDUSTRY 10-Week Strengthening

Overview

What: A comparative 10-week look at industry strengthening
Why: clearly and quickly understand where there is strengthening and weakening over a relevant time frame

4. SUB-INDUSTRY 10-Week Strengthening

Overview

What: recent week-by-week strength changes for the industry and its sub-industries
Why: objective measurement of strengthening and weakening enabling comparison within and across industries and sub-industries

This key provides a guide for how to read the charts in this section.