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The technology sector and related ETFs have been hit by Hewlett Packard (NYSE:HPQ), Dell (NASDAQ:DELL), and Apple (NASDAQ:AAPL), as the “bubble” starts to cool.

The technology sector has been red hot in recent months, with major ETFs up more than 5% since the beginning of February. Apple has been the big news maker, as it broke $500/share for the first time and has been up more than 10% in the last three weeks.

Hewlett Packard dropped 1.4% yesterday, as the company reported a steep drop in earnings that widely missed estimates, while Dell Computer tumbled 5.8% due to slow sales and declining profits. Apple also declined 0.35% yesterday, as it consolidated above $500/share and remained in vastly overbought territory, amid rumors that it is going to pay a dividend. Apple’s shareholders’ meeting today sees the prospect of a dividend announcement by CEO Tim Cook.

Major Technology ETFs:

Sector SPDR Trust SBI Interest (NYSEARCA:XLK): -0.35%

PowerShares QQQ Trust (NASDAQ:QQQ): -0.46%

Vanguard Information Technology ETF (NYSEARCA:VGT): -0.54%

iShares Dow Jones U.S. Technology Sector Index Fund (NYSEARCA:IYW): -0.49%

The technology sector and technology ETFs remain vastly overbought and overextended on a technical basis with PowerShares QQQ Trust sporting an RSI reading of 69.87, just touching the “red zone” of 70, and with the ETF price some 12% above its 200-day moving average. However, the technology ETFs remain on point and figure “buy” signals and well above their 50- and 200-day moving averages, so we have a situation where markets are consolidating after a most impressive bull run.

Bottom line: The technology sector and technology ETFs are due for a pullback that could be as much as 10% as all major indexes are in severely overbought territory and stretched very tightly.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.

Source: Tech Sector Hit By HP, Dell, Apple