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Is Tech's Outperformance Back?
If you're interested in NOT generating any alpha at all, Technology stocks have been a great place to do that.
This has been the case for most of this year in Large-cap Tech, and for over 18 months in Small-cap Tech.
But this is a bull market right? Should we really expect this much underperformance from Technology to actually continue?
Or is sector rotation the lifeblood of a bull market? And so Technology needs to get a turn as well?
I think it's the latter. And the market appears to agree.
Look at the S&P Technology index going out at new all-time highs last week, and (in blue) you can see how Tech relative to the S&P500 is trying to finally find its footing as well:
Keep in mind that the Technology index has a very heavy weighting in just 3 stocks: Apple, Microsoft and Nvidia. Together, they represent almost 1/3 of the entire large-cap Tech index.
Meanwhile, the Equally-weighted Technology Index just went out at new all-time highs, reiterating the broad participation in Tech.
If you look, the underperformance from Large-cap Technology ended in September. This is on both a market-cap and equally-weighted basis.
But the ensuing outperformance has yet to begin.
Step 1: Stop going down.
Step 2: Start going up.
We're still waiting for Step 2 and I think it's coming.
We saw the exact same thing this summer in Consumer Discretionary. And look what a monster winner that turned out to be.
It's a bull market. And this is the sort of thing that happens in Bull Markets.
So I think that Tech outperformance is coming. I just need to see it first.
Last week was our LIVE Monthly Charts Strategy Session that I host at the beginning of every month. We talked about what we're doing in Technology, which stocks we're buying, and which ones we're avoiding.
This is a can't miss event as we finish up 2024 and prepare for the new year.
Premium Members of ASC Research get access to the LIVE and recorded replay for each of these Video Conference Calls that I host 2x each month. Also, make sure to download the 170+ charts in an easy to scroll through PDF, and review each of the new trade ideas with entry points and targets in our proprietary Rangefinder App.
