The Technology Select Sector SPDR FundNYSE American: XLK

XLK seems to be poised for a short-term continuation of upside trend, due to Trump's potential re-election and Powell's dovish monetary stance. Current economic indicators and strong Q3 earnings point to a positive outlook for XLK, but rising T-Note yields signal potential inflation risks ahead. The pressure from Trump's policies and upcoming debt maturities forces regulators into a "difficult open-heart surgery".

The Technology Sector continues to lead the overall market's earnings power and Google's earnings announcement on Tuesday was a reminder of that fact. The XLK Technology Sector ETF has an excellent long-term performance track records (avg. annual 10-year return of 20.5%). The biggest technology company all have strong global brands, strong growth, scale, and excellent free-cash-flow profiles.

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State Street Global Advisors have revamped the weighting and rebalancing of their 11 Select Sector SPDR Funds, notably affecting XLK's top holdings. The new methodology aims to prevent extreme rebalancing, ensuring more stable and proportional weights for top stocks like AAPL, NVDA, and MSFT. The changes reduce turnover and could boost performance.

Designed to provide broad exposure to the Technology - Broad segment of the equity market, the Technology Select Sector SPDR ETF (XLK) is a passively managed exchange traded fund launched on 12/16/1998.

Technology stocks led the 2024 rally but have since declined sharply, with XLK's performance suffering in part due to heavy reliance on Microsoft and NVIDIA. Both Microsoft and NVIDIA are in downtrends, contributing to XLK's bearish momentum and poor technical indicators, including falling below key support levels. XLK's seasonality is weak in September, but historically strong in October and November, suggesting a potential year-end rally after further declines.

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XLK, the SPDR Select Sector Technology ETF, offers concentrated exposure to high-margin tech companies, and could potentially outperform other funds like QQQ over the long term. Tech companies have unique advantages due to low unit COGS and high barriers to entry, which powers excellent operating leverage. Despite valuation concerns, XLK's top holdings are trading near their 5-year fair value ranges, making the ETF attractive at 28x FWD P/E.

The Technology Select Sector SPDR Fund (XLK) is down 6% this month amid a downturn for technology stocks.