Insider Buying Alert: Is the Tech Sector Going to Rally in 2011?

Tech stocks took a tumble back in 2008 as the recession put the brakes on both consumer and corporate spending. But as shoppers and companies started re-opening their wallets, tech found itself back on top in 2010. And with a strong start to the new year, there's good reason it's there to stay in 2011.

Last year, the tech-heavy NASDAQ outpaced both the Dow and the S&P 500, largely on the strength of the sector -- and there's still room for it to grow. Chipmakers and semiconductor companies create products found in just about every gadget imaginable, from iPhones to DVDs to GPS systems -- and the list keeps on growing. With the demand for processors on the rise, the tech sector is expected to see a 7% jump in sales this year.

And with $2 trillion of stockpiled cash waiting to be spent, look for companies to start making hardware and software upgrades, and expand their IT budgets. Research firms Gartner and IDC expect a 3%-6% boost in tech spending in 2011, and Forrester Research projecting an even more optimistic 7%.

And as Investment U's Matthew Carr points out, increased regulatory measures are going to require technological solutions to be implemented, while health-care reform could mean "billions of dollars will be up for grabs in the medical records market."

That said, there's no guarantee that tech will put in a repeat performance. And share prices for some companies have already crossed over into the realm of extreme valuation.

So which tech stocks will keep up the momentum? For clues, we looked to see what the insiders were up to. If company management is buying up their own stock, it's a good indication that they think the best is yet to come. (Click here to access free, interactive tools to analyze these ideas.)

Surprisingly, we only found two tech insiders that have used their own cash to buy the shares of their employers during recent weeks. These insiders expect tech stocks to rally -- do you agree?

Interactive Chart: Click on the time line to compare the performance of Dell against American Tower.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.