Tech ETF XLK Flatlines as Investors Rotate to Value: Is the Growth Trade Finally Out of Gas?

If you’re looking for fireworks in the tech sector, you’re about to be disappointed. The Technology Select Sector SPDR Fund (XLK) is sitting at $141.06, dead flat, as if someone unplugged the market’s favorite momentum engine. For years, tech was the only game in town. Now, the rotation is real, and it’s leaving the high-flyers stranded on the tarmac while value and small caps get all the attention.

This isn’t just a pause. It’s a full-blown stall. Reuters reports a “risk aversion” trade as investors chase cheaper, smaller companies and reassess their appetite for volatility after the latest round of market whiplash. The Dow just hit 50,000 and nobody under 40 seems to care (WSJ). Meanwhile, the Super Bowl Indicator is back in the headlines, which tells you everything you need to know about the current state of market analysis. Tech, once the undisputed heavyweight, is suddenly the wallflower at the dance.

Let’s talk numbers. XLK at $141.06, unchanged on the session, is a microcosm of the broader malaise. The sector’s biggest names have stopped moving, and the algos that used to chase every tick higher are now looking elsewhere for their dopamine hit. The macro backdrop isn’t helping. The U.S. labor market is in a “deep freeze,” with hiring dropping off for reasons ranging from worker stickiness to tariff uncertainty (WSJ). Earnings season has been a mixed bag, and the Fed’s next move is anyone’s guess. The Fool is already predicting that the Trump bull market will end not with a bang, but with a Fed-induced whimper.

Historically, tech has been the safe haven for growth. But the last few months have seen a decisive shift. Value and small caps are back in vogue, driven by the perception that they’re less exposed to rate hikes and more levered to a domestic recovery. The rotation isn’t just a trade. It’s a regime change. The question is whether it’s sustainable, or just another head fake before the growth trade comes roaring back.

The data suggests this isn’t a one-off. XLK’s relative strength has been deteriorating for weeks, and the sector’s correlation with the broader market is breaking down. The old playbook, buy tech, ignore everything else, isn’t working. Investors are finally asking whether paying 30x earnings for a company with slowing growth is really the best use of capital. The answer, for now, is no.

Strykr Watch

Technically, XLK is stuck in a tight range, with support near $140 and resistance at $143. The 50-day moving average is flattening out, and RSI is hovering in the mid-40s. There’s no momentum, no conviction, just a lot of waiting. If XLK breaks below $140, look out below. The next support is all the way down at $135, and there’s not much in the way of buyers until then. On the upside, a break above $143 could spark a short-covering rally, but it would need a catalyst, earnings, a macro surprise, or a sudden shift in sentiment.

The risk here is complacency. When tech stops moving, the rest of the market gets nervous. The sector is too big to ignore, and a sustained breakdown could drag everything else with it. But the opportunity is in the rotation. Value and small caps are getting the flows, and the risk/reward is finally tilting in their favor.

The bear case is that tech is dead money until the macro picture clears up. The bull case is that this is just a pause before the next leg higher. For now, the smart money is staying nimble, rotating into what’s working and waiting for tech to give a signal.

For traders, the setup is clear: fade breakouts, buy dips at support, and keep an eye on the rotation. If XLK breaks the range, follow the momentum. If not, look for opportunities in the sectors that are actually moving.

Strykr Take

Tech isn’t dead, but it’s definitely napping. The rotation to value and small caps is real, and it’s not over yet. XLK is a trade, not a thesis. Play the range, respect the levels, and don’t get married to the old narratives. When tech wakes up, you’ll know. Until then, follow the money.