Over the past few weeks I have seen a bit of skepticism showered on the technology sector. As was noted in a Bloggingstocks post earlier this month, Jim Cramer offered some cautious comments on the group, saying that many stocks were "off limits". I then saw this BusinessWeek article that says Standard & Poor's is calling for a potential 7% to 10% correction in the Nasdaq Composite.

To be sure, this hasn't been a good couple of weeks for individual tech stocks. Companies such as Intel Corp. (NASDAQ:INTC), Apple Inc. (NASDAQ:AAPL), International Business Machines (NYSE:IBM), Advanced Micro Devices (NYSE:AMD), Lam Research (NASDAQ:LRCX), and Symantec (NASDAQ:SYMC) have all seen their stocks hit. Some posted lower-than-expected earnings, some warned, and some saw selling despite seemingly decent results. Each stock drop has helped to weigh on the collective psyche of investors. In other words, each individual sell off has fed into the skepticism expressed above.
I wanted to point this out because I think there may be a chance for an overreaction to the "headline shock" we have seen. Yes, a number of stocks have been hit for sizable one day losses but I am not yet seeing this spill over into the broad market. Technical analysis is often described as more art than science so I think it is reasonable to have different interpretations on where the Nasdaq Composite stands. As pointed out in the BusinessWeek article, the index did fail to hold its recent breakout to a new annual high. However, it hasn't yet broken the uptrend that has been in place from the July lows, despite the recent flurry of individual stock drops.

In my experience, trends tend to persist longer than you expect so I think it is worth giving uptrends the benefit of the doubt. We still have to weather a number of earnings reports so perhaps things will turn out to be as bad as some expect. If not, the recent tumultuous action could create some buying opportunities for the tech issues you have been keeping an eye on.

Nick Perry is an analyst with Schaeffer's Investment Research.