WSJ: Tech Outlook Darkens

Investment Analysis Clubs Destiny Solutions Corporation
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WSJ headline: Outlook for Tech Stocks Darkens After Rocky Stretch

Sub-headline: Sector has been more susceptible to rapidly shifting sentiment in the bond market as the Fed aggressively raises interest rates to counter inflation

https://archive.ph/gLXp3

A rally in technology shares helped the stock market snap a three-week losing streak. There are already signs that reprieve may be short lived.

Investors are bailing out of technology-focused mutual and exchange-traded funds at the fastest clip since early February, when the tech selloff was first intensifying, according to data from Refinitiv Lipper. They yanked about $2.4 billion from such funds in the three weeks ended Wednesday.

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Even after rallying 4.1% this past week, the tech-heavy gauge is still down around 3.1% over the past month, underperforming the S&P 500, which is off 1.3%. In 2022, the Nasdaq has fallen 23% and is headed toward its worst annual performance relative to the broad benchmark since 2002.

My note: the Nasdaq daily chart shows a clearly defined UP channel drawn from this past June’s lows:

$COMPQ daily chart (Nasdaq)

https://schrts.co/bhcrgtHe

On the other hand we have this factoid:

“Even after the downturn this year, many analysts say tech stocks still appear richly valued. $AAPL Apple Inc., $MSFT Microsoft Corp. , $GOOGL Alphabet Inc., $AMZN Amazon.com Inc., $TSLA Tesla Inc., $META Meta Platforms Inc. and $NVDA Nvidia Corp. have on average a forward 12-month price-to-earnings ratio of 38, compared with 16.7 for the S&P 500, according to DataTrek Research.”

$COMPQ weekly chart (Nasdaq) shows increasing MACD Histogram at bottom of chart, which is bullish. If we breakout to the upside on this chart, it would be bullish, but, I’m getting ahead of myself. Patience. Plenty of trades everywhere. Let the trades come to 'ya (as John Hiatt would sing.)

https://schrts.co/MIXHrKzW

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I exited my $ON swing trade yesterday and kept gains in “underlying” shares of $ON, which is one of the strongest chip stocks out there. This and $NVDA are two of my highest conviction chip stocks and I’ll continue to trade them - both long and short - and building a nest of “zero-cost” shares in both.

I exited this one a little earlier than usual as I did not want to hold over this weekend. Will probably re-enter this week if I can find a decent looking entry spot.

$ON daily chart

https://schrts.co/iyaCAHmM

$ON weekly chart

https://schrts.co/euQftgMt

$ON monthly chart clearly shows the All-Time High hit last month of August, 2022

https://schrts.co/RfWXQjHW

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Achhh! Forgot to cut and paste these paragraphs concerning semiconductors:

https://archive.ph/gLXp3#selection-503.0-539.226

Meanwhile, semiconductor stocks, such as Nvidia and Advanced Micro Devices Inc., have faced some of the most acute pressure of late. Both stocks have tumbled more than 10% over the past month, a slide that has erased tens of billions of dollars in market value.

“We continue to believe we are entering the worst semiconductor downturn in a decade given the recession and inventory build,” Citigroup analysts wrote in a note to clients on Aug. 30. The analysts projected that the PHLX Semiconductor Index would fall another 25%.

The underperformance in tech is bad news for the broader market, which is closely correlated to the group’s performance. The S&P 500 is weighted by market cap, and most of its biggest constituents remain in the tech industry.