3 Under-Followed Ways to Trade the Rise in Technology

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3 Under-Followed Ways to Trade the Rise in Technology

When it comes to the IT sector during earnings season, it is easy for the large giants such as Alphabet Inc. (GOOG), Facebook, Inc. (FB), and Amazon.com, Inc. (AMZN) to monopolize the focus. It is also quite usual for firms like the ones stated above to own the majority of the holdings in technology-focused exchange-traded funds.

For this post, we’ve decided to concentrate on sub-segments of the IT sector where portfolio holdings in the large players are often decreased, while keeping focused on an area that is rapidly increasing and deserving of inclusion in any portfolio.

SPDR S&P Internet ETF (XWEB)

Sub-industries within the IT sector, such as internet services and infrastructure, as well as interactive media, have benefited from consistent gains in demand over the last decade, and they tend to fly under most retail investors’ radar. The SPDR Internet ETF may be worth a deeper look for individuals looking for a strategic or tactical position at a more focused level than typical tech investment (XWEB).

The price has lately pushed over the resistance of its 200-day moving average and a crucial horizontal trendline, as seen in the chart below. A bullish crossing between its 50-day and 200-day moving averages, known as a golden crossover, has emerged from the breakout. This classic long-term buy signal often heralds the start of a significant rally, and the recent recovery off of local support will almost certainly be used to confirm that the bulls have taken control of the momentum. Bullish traders will most likely attempt to add to their holdings around present levels, while bearish traders will want to guard against a sell-off by setting stop-loss orders below $87.21 in the event of a rapid change in mood.

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SPDR Kensho Smart Mobility ETF (XKST)

Smart transportation is another specialized section of the IT sector that has gained traction as a result of fast innovation. We’re talking about firms working on autonomous and connected vehicle technology, drones and drone technologies for commercial and civilian purposes, and sophisticated transportation tracking and optimization systems. The SPDR Kensho Smart Mobility ETF is an intriguing ETF that may be worth investigating for individuals wishing to obtain exposure to this specialized area (XKST).

Looking at the chart, you can see that the price has broken over the barrier of its 200-day moving average, triggering a golden crossing between the long-term moving averages. The closeness to important support levels and the recent moving average crossing indicate that the bulls are in complete control and that a large advance away from support is possible given the favorable risk-to-reward ratio.


SPDR FactSet Innovative Technology ETF (XITK)

The SPDR FactSet Innovative Technology ETF is another reasonably unpopular tech ETF that may be worth investigating further (XITK).As the name indicates, the managers of this fund have positioned XITK to provide investors with exposure to firms that provide cutting-edge goods and services while also displaying substantial revenue growth. Holders of this fund are also especially interested in exposure to the overall growth in new technology across a diversified number of far-reaching trends, which is provided by the fund’s various holdings, which now stand at 95.

Looking at the chart, you can see that the price just surpassed a critical level of resistance. The breakthrough indicates that the bulls have taken control of the momentum and that prices may be heading higher in the next weeks or months.

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The Bottom Line

For retail traders interested in technology, the larger players get the greatest attention since they are the entities they are most familiar with. However, specialty funds, such as those discussed in the preceding article, provide traders with a different perspective than what is being consistently presented in the media and seem to be ready for a large rise upward.

Casey Murphy did not hold any of the assets listed at the time of writing.

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