Generally speaking, there are two types of technology companies: those that sell or market directly to consumers, and those that market and sell to businesses.

For the last several months,  consumer-focused  technology companies have dominated the stock market, whether they're consumer internet (Alphabet (GOOGL​), Facebook (FB), Netflix (NFLX​)); consumer retail ( (AMZN​)); or consumer hardware (Apple (AAPL​)).

Recently, however, consumer tech companies have been running out of gas. Apple, the sector leader and largest component of the Nasdaq has been looking particularly vulnerable. Since peaking in August, shares have come under steady distribution as shown by their price and Relative Strength Index (RSI) declines. The stock recently broke down below $158.00 to complete a bearish descending triangle and has fallen to test long-term uptrend support near $155.50. Should that level fail, Apple could continue to fill in a breakaway gap that formed in August with its next potential support at the bottom of that window near the $150 round number.


In addition to technical exhaustion, Apple shares may also be facing fundamental exhaustion. The stock didn’t respond to recent iPhone, iWatch and Apple TV product announcements last week. This week, reports have been circulating that suggest iPhone 8 pre-orders have been slow, caught between people getting tired of upgrading for only incremental gains, and those waiting for the iPhone X.

On the other hand, corporate technology companies that had lagged through the summer have started to rebound, led by Cisco Systems (CSCO). The stock sold off back in May following a big earnings miss and has been trending sideways in a lower range through the summer. But in late August, Cisco shares completed a double bottom near $30.50 and have been trending back upward since then. Recently, they broke through $32 and out of a four-month base, completing a bullish ascending triangle pattern. Their next potential resistance appears near $33.10, which was a previous low, and then $33.80, which was the top of a former gap.


The Bottom Line

Cisco breaking out of a base while Apple completes a top suggests that capital flows between consumer and corporate technology may be shifting, and the performance gap between the two groups is starting to close.

For more trading insights, please visit our website.


CMC Markets is an execution-only dealer and does not provide investment advice or recommendations regarding the purchase or sale of any securities. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CFD and FX trading with CMC Markets is only available in jurisdictions in which CMC is registered or exempt from registration. CMC Markets neither solicits nor accepts business or accounts from residents of the United States of America.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.