The new all-time high in the Technology Select Sector SPDR ETF (XLK) established on Friday June 9 followed by a high-volume Key Downside Reversal remains the dominant feature of the post-November upleg, and was accompanied by a glaring upside momentum divergence that serves as a warning signal indicative of upside price exhaustion.
2) All of the action since June 9 has carved out a sideways digestion pattern beneath the cresting 20 DMA, usually a harbinger of approaching downside price continuation.
3) A sustained breach of key support between 55.10 and 54.80 will have potential to unleash the most serious correction in XLK in the past year, since its pre-Brexit weakness. Only a climb above 56.35 will neutralize the developing negative set-up.
