Tech

According to technical analysts, the current tech boom has more room to run

Getting Technical on Tech
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Getting Technical on Tech

Investors have piled into tech stocks, driving that sector back to the highest levels since the dotcom bubble. But what do the technicals tell us about where tech heads from here?

Talk to technicians and they say there is more room to run.

Jonathan Krinsky, Chief Market Technician at MKM Partners, notes that the Nasdaq 100 -- which includes Alphabet, Amazon, Facebook and Microsoft -- is currently about 10 percent above its 200-day moving average. In those heady dotcom days, it was up to 60 percent above that long-term trendline at its peak.

Krinsky's point is that the sector could be overbought, but history suggests that it can be much more so.

Another reason for his bullishness: he notes that, in the last couple of trading sessions, over a third of the Tech index in the S&P 500 has hit new 52-week highs -- some of the strongest readings in years. That many names touching new highs is a bullish sign of broad participation.

However, just because Krinsky is fan of the sector does not mean he's bullish on every individual name. He says that he would avoid NVIDIA, for example, which is in the red so far this year, and trading below its 20-day moving average as well as its 50-day moving average, signaling caution ahead for traders.

Another name to watch: Apple, which is off to a very strong start in 2017. The iPhone maker has already surged some 20 percent, following better-than-expected earnings results and excitement about the company's product pipeline.

Ari Wald, who is Oppenheimer's Head of Technical Analysis, says the stock could consolidate gains over the next couple weeks. However, Wald says momentum is strong as the stock has broken out above its prior resistance at $134, which traders can now use as near-term support.

While chartists remain bullish, those professionals relying on fundamentals can have a very different take. Sam Stovall, CFRA's Chief Investment Strategist, tells CNBC that he remains Market Weight on Tech, as valuation and estimated earnings growth for the sector do not now appear especially compelling.