Tech indices rise as hedge funds slash positions; Magnificent Seven technicals assessed

Technology shares are attempting a rebound, though a Goldman Sachs report points to the selling pressure that drove last week's decline, which could cap any upside.

Goldman's prime brokerage data shows hedge funds reduced their technology holdings at the quickest rate in at least a decade over the five trading days through October 15. The largest dollar-value selling took place in semiconductor stocks. Even with that reduction, technology exposure stays elevated, with net allocation in the 90th percentile against the past five years.

This situation leaves traders with a question: Did the selling clear the way for a recovery, or will hedge funds use any rebound to cut exposure further?

That is where technical analysis becomes relevant. The Goldman report explains the pressure, but the charts define the risk. Are buyers regaining control, or is the bounce encountering resistance that keeps sellers active?

I examine some of the large-cap technology stocks including Microsoft, Nvidia, Amazon and Apple, outlining the key levels buyers need to reclaim and hold to give the recovery more credibility.