Put buying in the tech sector has been steady over the past week. Likewise, money flow into the tech sector has been occurring even as prices in this sector have been lagging the broader market.
This reveals a situation where dumb money has been selling tech short under the assumption that the lag in this sector is somehow meaningful. At the same time, it shows that smart money has been accumulating the weakness.
The week may get off to a weak start as overbought conditions in some of the stronger areas of the market work out the profit takers. The market remains in an uptrend here though and we expect that dip buyers will continue to step up to the plate. A breakout in the tech sector could spark a strong rally as current shorts are forced to cover.
Keep in mind that the QQQQ is still about a week away from touching down at its long term up trend line. Meaningless games are sure to be played as the market continues its sideways consolidation.
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