While most sectors have been breaking out and sprinting to new highs, the market’s biggest leaders have been doing… nothing.
Large-cap tech has spent the past few months moving sideways—not breaking down, not surging higher—just quietly digesting gains.
Here, we’re looking at a textbook pennant formation in $XLK, a classic continuation pattern that forms during ongoing uptrends:
This kind of structure represents compression, energy building, and supply and demand coming into balance before the next move.
More often than not, these patterns resolve in the direction of the underlying trend.
In this case, that trend is still higher.
The real risk only comes if these patterns fail and move in the opposite direction. Until that happens, this sideways action is simply fuel for the next up leg.
This setup also becomes a classic catch-up trade—a perfect opportunity to add some of the big-cap tech names that have been consolidating.
Plus, don’t miss Steve Strazza live tomorrow at 2 PM ET, where he’ll unveil his latest Beat Report research and break down how to trade during earnings season like a pro.
