Though Apple (AAPL) stock and other big-cap tech leaders remain off their September peaks, the broader market is riding a postelection rally to new highs.
A stands for annual earnings growth of at least 25 or more for the last three years, N new product Volume 0%
The erstwhile breather in tech stocks may set up a chance for investors to buy at proper entries. But here's another way to get in on these leaders and many more ahead of potential breakouts.
As the name implies, Technology Select Sector SPDR Fund (XLK) gives investors access to the tech sector of the S&P 500. It's up 33% this year through Wednesday's close, vs. the S&P 500's 12% gain. The Technology Select Sector Index tracked by the ETF is one of the 11 sectors of the benchmark index.
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XLK includes companies in industries such as tech hardware, storage and peripherals, software, semiconductor and related gear, and IT services. The $36.2 billion fund will mark its 22nd anniversary next month.
Software, the biggest sector weight as of Nov. 24, accounted for nearly 32% of the 73-stock portfolio. Technology hardware, storage and peripherals weighed in at almost 24%, and IT services, about 20%. Semiconductors and semiconductor equipment made up 19%.
Top Stocks Include Leaderboard Names
Apple stock, Microsoft (MSFT), Visa (V), Nvidia (NVDA) and Mastercard (MA) were the top five holdings going into Wednesday. They accounted for more than half, or 54%, of total assets.
Nvidia leads with a 125% year-to-date gain through Wednesday's close, although its latest breakout fizzled. That's far ahead of even the Nasdaq composite's 35% gain. Apple stock is up 58% this year and Microsoft 36%. Nvidia and Microsoft are IBD Leaderboard stocks. Apple is on the Leaderboard watchlist.
Microsoft is about 8% away from a 232.96 buy point, according to MarketSmith chart analysis. Nvidia, currently testing its 50-day moving average, has slumped since it tried to break out of a cup with handle Nov. 6.
Will Apple Stock Pop?
Apple stock, also testing its 50-day line, is building a new base. It's about 16% away from a 125.39 buy point and could also present an alternate entry at 125.39.
Investors could wait for each of these breakouts. But the Technology Select ETF is only 4% below a 127.82 buy point of a flat base. And it's OK to buy an ETF as it finds support at its 50-day (or 10-week on a weekly chart) line, as is the case right now.
An ETF not only gives you access to a basket of stocks — it can also greatly lower risk if one or several holdings suffer a sharp drop. XLK charges a 0.13% expense ratio.
PayPal (PYPL), Salesforce.com (CRM), Adobe (ADBE), Intel (INTC) and Cisco (CSCO) rounded out the ETF's top 10 holdings, at less than 3% each.