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There’s no question that Big Tech is in the driver’s seat of the bull market, but it has friends.
Major indexes are barely in the black in October of this year, but the third-quarter results of Bank of America (BAC) and Goldman Sachs (GS), which reported significant revisions to investment banking fees, are pushed up.
More importantly, since the Aug. 5 Japanese Yen panic, the so-called “finan” sector has risen along with three other sectors — tech, consumer, and industrial — and outperformed the S&P 500. That’s what I’m doing. All four sectors are up about 15%. There’s a bit of an edge to technology. (This low is technically important because it marks the bottom of the year’s largest decline, which is a very normal 8.5%).
After all the concentration surrounding the ‘Magnificent Seven’, it may seem familiar, and perhaps a little unsettling, that ‘technology is leading’ again. . But unlike other times in this bull market, now two years in, the tech industry has some company, thanks to the influx or rotation of capital into other sectors.
This is a process as old as public markets. CMT’s Ralph Acampora, the godfather of technical analysis, famously quipped, “Sector rotation is the lifeblood of bull markets.”
Jay Woods, Ralph’s nephew and floor governor at the New York Stock Exchange and chief global strategist at Freedom Capital Markets, recently joined Stocks in Translation to dispel this notion. .
“Money isn’t leaving the market, it’s just going from one sector to the next,” Woods said, pointing to the strength of software stocks. He particularly highlighted cybersecurity-related initiatives such as CrowdStrike (CRWD) and Cisco (CSCO). Both stocks were damaged at one point, but are now in the lead.
Woods reflected on Cisco’s back-and-forth journey back to the heights of the dot-com bubble.
“I hate that I like Cisco right now,” Woods said. “I loved it in 1999, and it’s right where it was trading in 1999. It’s great.”
In fact, today’s technology sector leadership is in stark contrast to earlier this year, when Mag7 stocks dominated. Longtime leader Nvidia (NVDA) is up 30% from its Aug. 5 low, but IBM (IBM) is close behind, rising from the ashes of legacy technology to new records. .
What’s more, more than 20 stocks in the S&P 500 have outperformed Nvidia since the yen’s depreciation, led by power companies Vistra Corporation (VST) and United Airlines (UAL), rising 85% and 70%, respectively.
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Many of these stocks are just laggards who were left behind after getting beaten up in the 2022 bear market. But there are still potential winners among overextended companies.
“Give me a five-year weekly chart of utilities. Talk about a nice rounded base and then a breakout,” Woods said. “(These are) no longer your grandparents’ utilities.” he added.
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In Yahoo Finance’s podcast, “Stocks in Translation,” Yahoo Finance Editor Jared Blikre cuts through the market clutter, loud numbers, and hyperbole to provide important conversations and insights from across the investment landscape to help you make the right decisions. Provides the essential context needed to make decisions. your portfolio. Find more episodes on our video hub or watch on your favorite streaming service.
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