Is it Time for the Comeback of the Tech sector?
24 April 2024
Rebound after correction could be only technical nature
Focus on earning season: Magnificent seven will report these days
My Portfolio:
No comeback in the Tech sector yet
Selective buys of single stocks - selective adds of short positions
Cash remains
Chinese Stock Market as alternative?
After the correction of the heavily overbought Tech stocks, there is now the big question, if it is already time for the comeback of the sector including all the hammered stocks related to artificial intelligence (AI).
My Investment Calls on US Tech stocks
Chart Nasdaq Composite Index
since 07/2022 - 24.04.2024
Source: TradingView 24.04.2024
Technical Rebound
So far, the market is showing a typical pattern of a rebound. After closing lower during 7 consecutive days, market normally shows a reaction in a way of a rebound. However, this upmove does not look very strong to me. In such a case, this counter-reaction could quickly run out of steam. This could lead the path for more days with negative performance.
Earnings Season started
The earnings season for the first quarter just started. Tesla came out with disappointing results yesterday evening. However, the stock showed a strong reaction on the news, as the stock price corrected already heavily the days and weeks before. How long will this rebound last? The company struggles lately and lost to be in favor among investors.
Why is Tesla important to look at? The stock is part of the so-called group of the magnificent seven companies (Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia, Tesla) as their market weight and therefore the impact of a stock price move on the overall market is quite substantial.
Tonight Meta (Facebook) will come up with the results after the market close. It will be very interesting to follow these earning figures, as it could give the market a direction, in either way.
My Portfolio
I am not convinced that there is the time for a clear comeback in the Tech sector. The market can go in either direction, depending on the earning reports from the big Tech companies. And, before I re-enter this specific sector, I definitely want to have clearer picture. This we only get with the next earnings coming up during the next days and weeks.
Therefore, the portfolio allocation is quite similar to the reported one in my last blog post “Riding the wave, how amazing – be aware, is not endless”. Selectively I just bought some single positions during the last days with my bottom-up approach. Most of them had a significant move after a certain newsflow. On the other hand I added some more short positions, why the total equity position has not significantly changed.
Overall, there is still a bigger portion of cash waiting aside to be re-invested.
While everybody is focusing on the US market, Chinese stocks show patterns of improving performance. Could be, that investors start to look beyond the US market for better alternatives, which are reasonable valued and have a potential to increase. In my view, Chinese market has quite a potential in the long-term. Stay tuned for a report coming up on this topic here on my blog ETFMandate.
Disclosure of shares in my portfolio specifically mentioned in this article (as of 24 April 2024):
No holdings in: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla