Technology Investing:  These Two Charts Point To An Imminent Tech Rally

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Take a look…


In this long-term weekly chart, you can see the tech behemoth is pushing above the $630 area (red line)… and that’s very important.

What’s the big deal about that price area?

For the past two years, GOOG has been rejected at that price level.  Time and again, when the stock reached the $630 area, sellers aggressively took it right back down.

But as you can also see, each time GOOG went down over the past two years, sellers couldn’t take it down as far as they did the previous time.  That weakening selling pressure eventually formed an uptrend line at the yearly lows (the green line).

The result of that price action is a bullish technical pattern…

Most technical analysts call it an ascending triangle.  The pattern suggests GOOG is likely to retest the late 2007 highs of $725.  But if you plan on joining in on the fun with this stock, be ready for big price swings.  GOOG can easily move 10 to 15 points on any given day.

And GOOG isn’t the only big tech stock gettin’ jiggy with it.

Take a look at Microsoft (MSFT)…


A similar long-term triangle pattern has developed over the past few years in MSFT.  Notice how the weekly trendlines are coming to a point (blue lines).  But more importantly, look at how MSFT is breaking above the top trendline in recent trading (green circle).

MSFT is another big tech stock on the verge of moving dramatically higher…

What’s going on here?

Two large cap tech names are suddenly looking very bullish!  And the funny thing is, I’m seeing a lot of other tech names that look eerily similar.

I think we’re on the verge of a big tech rally…

Why?

Not only do we have a bullish technical scenario for major tech stocks, but we also have a tricky market dynamic at work.

You see, analysts have been gloomy on tech due to the ongoing debt problems in Europe.  Worries over decreased tech spending by corporations have growth estimates for the tech sector looking sluggish at best.

But that could actually be the breeding ground for a rally…

You see, big rallies come when most investors and analysts aren’t expecting it.  It’s funny how that works, but I assure you it’s true.

The stock market consistently does what it can to apply the most pain and frustration to the most popular viewpoint.  And when the masses aren’t bullish on tech… you guessed it… tech can put together a bigger rally than you may think possible.

But what’s even funnier is this…

When investors and analysts realize a rally has begun, they sweeten their projections and start buying.  After all, they don’t want to miss out on the party.

That’s when the rally really gets cooking…

So pay close attention to the tech sector in coming weeks.  There’s no doubt we’ll see some down days here and there.  But if names like GOOG and MSFT stay on an upward trajectory, look for other tech names to do the same thing in 2012.

Until next time,

Justin Bennett

***Editor’s Note***  Speaking of technology, it looks like all the stars are aligning for an enormous rally in 2012!  In fact, the tech market today looks exactly like the tech market in the ‘90s—right before it skyrocketed!  Click here to see which stocks you need to buy to take advantage of this phenomenon…

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