Matt Weller, CFA, CMT
Faraday Research
Remember the so-called "Trump Trade"? Both in terms of political developments and price action, it seems like November 8th was about a half-decade ago, not just five months ago. When it comes to the stock market, traders rushed out to buy industrial, material and financial stocks, while selling health care and technology stocks.
The bearish health care thesis was fairly straightforward, given the Republicans' promises to "repeal and replace" the current health care law, but the explanations for the drop in tech stocks was always a bit more tenuous. Some traders argued that Trump's tough-on-immigration stance could deprive technology companies of the highly-skilled foreign workers on H1-B visas, while others (ourselves included) believed the post-election pullback in tech stocks was simply caused by investors taking profits the strongest names in their portfolios to chase "The Next Shiny Thing," namely financial and industrial stocks.
Regardless of the explanation for the initial drop, the tech sector has come roaring back of late. Though still far from the lofty "Tech Bubble" peak at the start of the millennium, technology stocks recently hit their highest levels relative to the broader stock market in 15 years.
Technology stocks have hardly been slacking on an absolute basis either. As the chart below shows, the technology sector ETF (XLK) made a run at its Tech Bubble peak near 54.00 earlier this month, and after a pullback, XLK is showing signs of bouncing off its 50-day MA so far this week:
Given the strong relative and absolute bullish trends in the tech sector, we'll continue to look for buying opportunities in the days and weeks to come. Top holdings in the sector include AAPL, MSFT, FB, GOOGL, T, INTC, VZ, CSCO, V, IBM, and ORCL, all of which are in our US equity universe.
This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.
Editors’ Picks
EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar
The EUR/USD pair edges higher to 1.0672 on Thursday during the early Asian session. The recovery of that major pair is bolstered by renewed selling pressure in the US Dollar and a risk-friendly environment.
GBP/USD remains capped below 1.2470, eyes on US data
The GBP/USD pair trades on a softer note around 1.2450 during the early Asian trading hours on Thursday. The softer UK inflation data prompted the expectation that the Bank of England will start lowering interest rates in the coming months, which weighs on the Pound Sterling against the Greenback.
USD/JPY drops to test 154.00 on Japan's intervention warnings
USD/JPY extends losses to test 154.00 in Asian trading on Thursday. The pair is undermined by the latest US Dollar pullback, Japan's FX intervention risks and a softer risk tone. Focus shifts to more Fedspeak and US data.
Editors’ Picks
AUD/USD bounces to 0.6450, shrugs off mixed Australian jobs data
AUD/USD is rebounding to test 0.6450 amid renewed US Dollar weakness in the Asian session on Thursday. The pair reverses mixed Australian employment data-led minor losses, as risk sentiment recovers.
USD/JPY drops to test 154.00 on Japan's intervention warnings
USD/JPY extends losses to test 154.00 in Asian trading on Thursday. The pair is undermined by the latest US Dollar pullback, Japan's FX intervention risks and a softer risk tone. Focus shifts to more Fedspeak and US data.
Gold price finds buyers again near $2,355 as USD licks its wounds
Gold price is attempting a tepid bounce in the Asian session, having found fresh demand near $2,355 once again. Gold price capitalizes on a softer risk tone and an extended weakness in the US Treasury bond yields, despite the recent hawkish Fed commentary.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.
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