Day Hagan Tech Talk: Rumours
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Summary
From “Mag 7” to “Lag 7?” Not completely, yet. But the number of technology stocks exhibiting relative outperformance is slowly declining, especially when compared to alternative equity market proxies. Also, while still underperforming the S&P 500 YTD, other sectors—Energy, Health Care, Financial, Consumer Discretionary, and Industrial—are slowly moving up the relative strength scale.
Go Your Own Way
It seems most of Wall Street continues to exhibit obsessive love for most everything Technology. But if we look behind the curtain at some of the changes taking place within NASDAQ and the technology universe (Figures 1-3), I believe some of Fleetwood Mac’s 1977 song “Go Your Own Way,” released on their Rumours album, better describes how the space should be viewed, at least on a short-term basis.
Loving you isn't the right thing to do
How can I ever change things that I feel?
You can go your own way, go your own way
You can call it another lonely day
You can go your own way, go your own way
Figure 1: S&P NASDAQ and New 52-Week High. | Considering the waning number of new highs, please respect support (green & blue lines, price labels) and resistance (red line) shown below. Also, please identify stop-loss points (trading and non-trading) for stock-specific Technology positions.
Figure 2: Various Relative Strength Ratios. | Select areas of and select stocks within the Technology complex are losing their relative strength dominance versus various market cap areas of the equity market. Please review your risk management tactics and reach out for charts of interest.
Figure 3: Energy Correlation to Technology. | Considering the observations above (and Figure 4 below), this chart is especially intriguing.
Figure 4: Light Crude Oil (continuous contract) with Rising 50-day MA (blue line). | While the near-term intraday price peaks haven’t been violated ($79.29, $79.60, $79.77), if viewed through the lens of closing prices, Crude Oil is breaking out to the upside and looks higher short-term.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 02.18-19.2024. Chart source: Stockcharts.com unless otherwise noted.
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