Setups in Tech

This year, many of last year’s growth leaders saw drawdowns of 30-70%. Many bears declared “the tech bubble has burst.”

The way I see it, the recent tech correction is healthy. It has separated the more quality names from the lesser quality stocks that got bid up during last year’s run. The chart below shows that mega-caps (FAMAG’s) and quality mid/large-caps (SE, CRWD, NET, SNAP, etc) have held up extremely well.

Nasdaq’s Advance-Decline Line has recovered from a breakdown. This indicates that smaller tech names are coming back to life - a bullish sign.

Looking at charts of individual stocks, there’s a lot to be excited about.

Finally, I want to show a 50-year chart of the Growth/Value ratio. I originally included this chart in a blog post back in Feb (“Inflation then disinflation”). It shows that relative to value, growth stocks are near 50-year base support. My view has been that growth’s bull market is still in early days.

With beautiful chart setups, low sentiment, and positive breadth, tech could be ready for its next leg higher.

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Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.