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Although the Investors Intelligence Bull/Bear ratio moved above 4.0, its most optimistic level since January 2018, Oppenheimer analysts are seeing a “complacent sentiment” lingering.
The high momentum in technology (NYSEARCA:XLK) has “largely driven the increase in complacency,” analysts said in a Technical Analysis Inflection Points report. “If one sees optimism as a contrarian concern, one likely sides more cautiously toward Technology.”
But the sector has shown trend-following characteristics with forward returns that have been positively correlated with its extension above its 200-day average.
Apple Inc. (AAPL), however, is ticking down and below its 200-day average, which was $184.
“Historically, weakness has provided an opportunity to buy Apple (AAPL), and we would note the stock’s trend is not overly damaged above its October low ($165),” analysts said. “Shares should also be supported by portfolio tailwinds from a relatively strong Technology (XLK) sector, in our view.”
But Oppenheimer removed Apple (AAPL) from its large-cap “buy” list earlier this month and downgraded the technology hardware and equipment subsector from overweight to market weight.
Within the S&P 1500 Technology industry:
- Semis and semi equipment had an above average gain over 14 weeks of 82 RSI (relative strength index).
- IT services had a neutral gain over 14 weeks of 45 RSI.
- Software had a neutral gain over 14 weeks of 41 RSI.
- Electronic equipment had a below average loss over 14 weeks of 37 RSI.
- Communications equipment had a below average loss over 14 weeks of 30 RSI.
- Computers and peripherals had a below average loss over 14 weeks of 15 RSI.