Technology StallingTechnology stocks underperformed the S&P 500 and Dow in the first quarter of the year, but that’s no big deal, as I continue to see technology as a market leader.

The month of April saw some buying return to technology stocks, with the NASDAQ managing to outperform the S&P 500—that’s a start.

While we have seen momentum dissipate from technology stocks and Apple Inc. (NASDAQ/AAPL) lose some of its shine, I remain bullish toward technology stocks.

The chart of the Technology Select Sector SPDR (NYSEArca/XLK) below shows the current sideways trading channel for this index and the current test at the upper resistance line, as indicated by the top blue line.

If my technical analysis is correct, I expect technology stocks to take a run at the resistance.

XLK Technology Select Sector SPDR stock chart

Chart courtesy of

According to FactSet, earnings growth for the information technology (IT) sector is estimated at 0.2% in the first-quarter earnings season—if Apple is excluded. FactSet is optimistic the sector will rally in the second half of this year, with an estimated growth rate of 12.0% in the third quarter and 11.2% in the fourth quarter. (Source: “Earnings Insight,” FactSet, April 19, 2013.)

Of course, if Apple rebounds, the growth rate will likely rise.

If we exclude Apple, FactSet estimates the IT sector will grow at 10.0% and 12.4%, respectively, for the third and fourth quarters. These are pretty darn good numbers.

My top areas for growth going forward include the mobile, Internet, communications, networking, IT, and cloud computing sectors.

I suggest adding both small and large companies across different businesses, which will add diversity, making your tech holdings less vulnerable.

I continue to firmly feel technology stocks will be the place for the best investment opportunity for growth investors going forward.

Apple is still on my radar, but I fear the stock could sink further if it fails to deliver a super-version of its “iPhone” that is a marked upgrade from the current “iPhone 5.”

Take a look at some of the smaller technology stocks that develop solutions for mobile applications, including Synaptics Incorporated (NASDAQ/SYNA), 8×8, Inc. (NASDAQ/EGHT), and Glu Mobile Inc. (NASDAQ/GLUU).

Some wildcard companies that had a glorious past but are suffering some growth issues include Microsoft Corporation (NASDAQ/MSFT) and Intel Corporation (NASDAQ/INTC).

Hopes for Microsoft are dependent on its “Windows 8” touchscreen operating system and the market acceptance for its Windows phone. The stock is hot at this moment.

In the case of Intel, the former chipmaker darling needs to address the slide in personal computers (PCs) and its associated impact on Intel chips. (Read “PCs a Relic for the Smithsonian; Intel Paints a Bleak Picture.”) The company is trying to build its mobile technology sector and, in my view, while it’s behind the eight ball, you don’t want to bet against Intel.

Please note: none of the stocks mentioned in this article represent a “buy” endorsement; rather they are meant to be an example of technology stocks that you may want to look at.