Technology has been on a tear this year with the Nasdaq 100 up more than 13% YTD, yet over the last week technology has struggled relative to many of the sectors. In spite of that there are a handful of large capitalization tech stocks which are continuing to push higher and recently experienced (or are very close to) an upside breakout. Can the push continue?
SEE: The Anatomy Of Trading Breakouts
AT&T (NYSE:T) jumped on April 24, putting the stock above resistance on a dividend adjusted basis (chart), but on an unadjusted basis it will still need to get through the 52-week high in order for a breakout to occur. The 52-week high is at $31.97, and a close price above that sends a signal of strength. Going back to 2009 the stock has been moving in a shallow trend channel higher; that channel provides a rough estimate of the likely target should the upside breakout occur. The upper band is currently crossing right near $31.5 and is likely to pose resistance if the stock reaches that point. While the channel provides an upward bias, at current levels the price is right near the middle of that channel. If it can't clear resistance, support is at $30 and $29 followed by $27.30 which is trend channel support.
Verizon Communications (NYSE:VZ) is another stock, which on an adjusted basis (chart), is at resistance, but on an unadjusted basis still has a bit of room before breaking out. The 52-week high in Verizon is at $40.48 and a closing price above that mark clears a lot of resistance going back to mid-2008. The trend has not been aggressively higher in this stock, on the contrary it has been moving predominantly sideways since the end of 2011. Resistance is at $40 which, if broken, could propel the stock to test the $40.48 mark. Verizon has failed to significantly trade above $40 since 2007, at which time $40 was a support level (now resistance). If the 52-week high is meaningfully cleared there is little resistance until $45 to $46. If the stock fails to keep moving higher, support is at $36.80 followed by $35.
A week ago America Movil (NYSE:AMX) was in danger of breaking through primary support at $23, but with a jump on April 23, the stock is now in upside breakout territory. Since the middle of 2011 the stock price has been converging, creating a triangle pattern as the support and resistance levels continually narrow. Recently, support held and resistance is now being tested. Being able to hold above $25 is a positive sign as this is above short-term resistance. A breakout of the triangle does not occur until $25.60 on the upside. A drop below $23.50 signals a downside breakout of the triangle. If that triangle is broken, it has long-term implications as the target is $6 added to the upside breakout price ($31.60) or subtracted from the downside breakout price ($17.50).
Seagate Technology (Nasdaq:STX) continues to move higher. The stock has already had a great year, up 81.62% to $29.88 from $16.43. The party may still not be over. Since March 2012 the stock has moved sideways, yet at no point did it signal weakness and over the last several trading sessions the stock has once again been putting in higher highs. The recent high at $29.88 is the loftiest level seen since 2003 when Seagate hit $31.35. Based on short and longer-term methods most of the upside targets have already been hit, but one remains at $32. If reached it would be highest level since the stock began trading in late 2002. With the majority of the targets already cleared, though, support levels should be watched also. Support should come in before $24.87 and $23.56 if the stock is to maintain strength. If the former is penetrated expect a move toward the latter.
SEE: Interpreting Support And Resistance Zones
The Bottom Line
Technology has softened over the last week relative to many of the other sectors. Given that technology has been a leader for some time, a bit of a retrenchment is expected. That said, not all technology stocks have stopped moving higher. These four stocks are all pushing at resistance or have already cleared it. Each situation is unique, though, and if the breakout levels can't be penetrated (or can't hold in the case of a breakout) watch for declines back toward support.
Charts courtesy of stockcharts.com
At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.