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Tech's Expected Resurgence


Tech's Expected Resurgence
By Mike Paulenoff, www.MPTrader.com

The enclosed chart shows the ratio of the Semiconductor HLDRs (AMEX: SMH) and the S&P 500 Depository Receipts (AMEX: SPY) for the past nine years. We noted this chart for our subscribers 10 days ago to illustrate how the SMH has begun to strengthen vis-a-vis the SPY in the last 3 months after falling substantially in relation to the SPY's price (from 68% to 18.4%) between 2000 and 2008. This indicates the beginning of a big resurgence of technology relative to the overall market, and that when the stock market actually reverses direction, technology should take a leadership role.

Since we wrote that on February 27, the SMH as a percentage of the SPY gained while the market was on the way down, and today with the overall market up the SMH is relatively strong again. Let's notice that the ratio itself is about to break out to the upside as it crosses above 23.6% on the way to 26% next.

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