Technology Sector Thu 2025-03-27: 6.1 Strength Score (Strengthened +0.1)
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 strengthened +0.1 to a a 6.1 composite score this week. Internet strengthened enough to change rating (to 5Average, now tied with Telecommunications as the leader).
Electronics (Chips/Semis) is the sector laggard at 7Weaker, and it weakened for the week but not enough to change rating.
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 25, 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 4Strong (strengthened enough to change rating) and XLK/Technology is rated 6Weak (strengthened but not enough to change rating). Notably, XLK is tied for weakest ETF with three other ETFs. Per this broader analysis today the Technology Sector is at a 6.1 strength rating.
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: TAILWIND/NEUTRAL
- MARKET = TAILWIND
The Market Strength Score changed to positive ("Risk ON") at +6% as of Friday, March 14, 2025. - SECTOR = Neutral/Tailwind
The Technology sector strengthened +0.1 this week but is at a below-average 6.1 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: Mixed
- Computer Hardware= Headwind/Neutral
6Weak, strengthened but not enough to change rating - Computer Software & Services = Headwind
6Weak, unchanged - Electronics = Headwind
7Weaker, weakened but not enough to change rating - Internet = Tailwind/Neutral
5Average, STRENGTHENED enough to change rating - Telecommunications = Neutral/Tailwind
5Average, strengthened but not enough to change rating
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.
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
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
Computer Hardware
Computer Software & Services
Electronics
Internet
Telecommunications
5. STOCKS Outliers: Strongest/Weakest Rated
Overview
What: stocks currently rated 1Strongest/9Weakest (highest/lowest of 9 strength ratings)
Why: these are interesting stocks for available capital because
- The Strongest have the least amount of overhead supply to dampen breakouts while
- the Weakest may be prone to volatility, subject to big pops from bottom-fishing and short-covering BUT ALSO to bigger and faster falls.
- (Not guaranteed and not a recommendation - weak stocks in weakening sub-industries may be better shorts than high-flyers.)
Computer Hardware
Computer Software & Services
Electronics
Internet
Telecommunications
6. STOCKS Outliers: 1-Week % Change
Overview
What: stocks with atypically strong or weak performance this week
Why: these are interesting stocks for available capital because
- The journey to 100%+ returns begins with 10% returns...
- Strength can beget strength
- So too weakness
- Momentum and trend-following are time-tested. - A multi-month rally begins with one up week...
- Meaningful moves last
- And can last longer than expected.
Computer Hardware
Computer Software & Services
Electronics
Internet
Telecommunications
7. STOCKS Outliers: 5-Year Highs/Lows
Overview
What: stocks at 5-year highs and lows
Why: potential large and/or rapid price movement
This section shows the strongest of the strong and the weakest of the weak, hitting 5-year highs and lows, respectively. The strongest are the leaders of the market. Meanwhile, there is no rational reason to hold weak stocks that are at multi-year lows. There are far too many other attractive choices to waste time or capital on such candidates.
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