The tough questions are the easiest to avoid but they are exactly the ones we should be asking week to week, indices are looking on track to follow our bullish view into Christmas but the Tech Sector is struggling to regain its mojo as a number of prominent companies missed their earnings expectations leading to savage treatment by the market i.e. this is definitely not a time in the cycle to catch falling knives, especially in high-value growth businesses.
At MM we’ve been looking for a decent bounce by tech stocks after the famous FANG stocks halved through 2022 with the catalyst being a pullback by bond yields and there lieth the issue, US 10-year yields remain comfortable above 4.2%, tech probably needs them well below 4% before investors chase these growth names. However, the last few days have seen a huge part of the economic puzzle start to follow our roadmap as the $US has started to weaken helping underpin the recent strength of the resources stocks, we still believe bonds and tech will follow but they are likely to need a softening of rhetoric by the Fed to change the strong trend.
- We are looking for a strong bounce by US tech into 2023 but there are no signs of a swing low at this stage.
