The S&P 500 tech sector just posted its first negative session after a record 15-day stretch in the green — its longest winning streak ever — and some strategists say the group is set to take a breather.
The sector closed lower Thursday for its first negative day so far in February. A popular exchange-traded fund that tracks tech, the XLK, also ended down after a 13-day winning streak. In Thursday trading the sector hit its highest level since September 2000. Nvidia was the worst-performing name in the sector, plunging more than 9 percent after Nomura's Instinet downgraded the stock.
"Just to put that in perspective, the Dow in 120 years has never had a 15-day winning streak," Eddy Elfenbein, editor of the Crossing Wall Street blog, said Thursday on CNBC's "Power Lunch."
Elfenbein suggested investors should pare their tech holdings and take profits if one is playing the broader tech sector.
"If you have something like the XLK, take some money off the table and redeploy that," he said, noting the XLK's heavy concentration in just a few stocks.
Apple, Microsoft, Facebook and Alphabet comprise nearly 42 percent of the entire 72-constituent fund.
"So when you look at that, I think there are good names, or if you want to play names [like] Apple, Microsoft — a stock I own in my fund — those are good names. But the more marginal names ... I'd stay away from. Take some profits," he said.
Tech continues to look overbought, wrote Michael Block, chief strategist at Rhino Trading Partners, in a Thursday note.
"Tech looks more and more overbought as scarce growth gets chased and we'll take the other side," he wrote, adding he is looking to reinitiate short positions in technology names.
From a technical perspective, the group may appear due for a pause, according to Oppenheimer's head of technical analysis, Ari Wald.
"But I think if you're in it, you let it ride, and if you do get a pullback, you want to buy it. We like tech for the long-run," Wald said Thursday on CNBC's "Power Lunch."
Examining a chart of the XLK relative to the S&P 500 back 17 years, Wald argued tech has shown strong leadership and momentum through all the market's ebbs and flows -- remaining strong through interest rate, commodity and currency rotations.
Technology is the best-performing sector in the year to date.
