Tech stocks are on track for a losing week.
The XLK technology ETF looks to close out Friday with a more than 4% weekly loss, its worst decline since October. Rising rates have punished the sector as higher yields make high-growth names less attractive to investors.
Todd Gordon, founder of TradingAnalysis, is skeptical the rotation out of tech stocks and into interest rate-sensitive groups will be a lasting trend.
"They have been telling us this since [the beginning of quantitative easing], that inflation is going to be absolutely runaway, and now we have all sorts of monetary stimulus over the last decade, now we're getting a lot of fiscal stimulus," Gordon told CNBC's "Trading Nation" on Thursday. "We'll see if it happens, and keep in mind interest rates have been dropping for 40 years. So it's a tough trend to call the end of."
He said the technical setup suggests 10-year Treasury yields will have a difficult path to crossing any further above the 1.5% mark. He says that level has formed a critical level of resistance.
"If, by chance, yields were to push up through there, that's a pretty good break of resistance, and that's indicative of underlying strength in yields and weakness in the actual bond market," said Gordon.
Should yields push up even further, Gordon said, past corrections in the XLK suggest it could fall to as low as $120. It traded just below $140 on Friday.
"If this correction is real, I don't want to sit through this kind of drawdown without taking any kind of proactive measures to protect or hedge in my heavily weighted tech growth portfolio," said Gordon. He is using options as a way to do so.
Gordon bought the 125-strike put and sold the 120-strike put with March 19 expiration. This gives him protection over the next three weeks in case the sell-off in the tech space continues over that stretch.