Stock Markets Analysis and Opinion

The Tech Trade Has Legs

2023.06.20 17:41

Michael Gayed

Below is an assessment of the performance of some of the most important sectors and asset classes relative to each other with an interpretation of what underlying market dynamics may be signaling about the future direction of risk-taking by investors. The below charts are all price ratios which show the underlying trend of the numerator relative to the denominator. A rising price ratio means the numerator is outperforming (up more/down less) the denominator. A falling price ratio means underperformance.

Consumer Discretionary – The Fed’s Hawkish Statement Actually Helps

XLY/SPY Weeky

Consumer discretionary () stocks have managed to avoid some of the up-and-down whipsaws that tech has over the past few weeks. The Fed’s statement that it anticipates two more rate hikes in 2023 has growth investors feeling as if it’s an implicit acknowledgement that a potential recession is still far off. An unexpected rise in U.S. retail sales also helped the cause.

Technology – Euphoria Still Alive & Well

XLK/SPY Weekly

For now, it looks like the downturn from early June was merely an aberration. Tech stocks () moved steadily higher throughout the entire week, but especially so after the Fed’s hawkish rate pause. There’s still a good deal of euphoria surrounding the AI and disruptive innovation trade and I’m not sure valuations are sustainable at this level. Sentiment may still push this ratio higher, but I sure would be hesitant about getting aggressive at these levels.

Communication Services – A Volatile Ride Ahead?

XLC/SPY Weekly

Communication services () has leveled off a bit here, but I wouldn’t dismiss the broader trend here. All of the risk signals are risk-on at the moment and this ratio has a history of regularly establishing new highs over the past six months. If artificial intelligence emerges as a longer-term trade beyond just the short-term mania, this sector should be a prime beneficiary, but it’s likely to be a volatile ride.

Industrials – Getting The Lift

XLI/SPY Weekly

While tech and growth maintain control of market sentiment, cyclicals continue to be lifted higher by the demand for risk assets. While the manufacturing sector (), in general, remains relatively weak, there’s enough momentum building for the delayed recession narrative that even the names from this group are getting the lift. Industrials generally need an economic expansion to outperform and the idea that a recession might be further off today than it was yesterday could be enough.

Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 82,074.99 1.66%
ethereum
Ethereum (ETH) $ 1,893.43 0.90%
tether
Tether (USDT) $ 1.00 0.00%
xrp
XRP (XRP) $ 2.29 2.52%
bnb
BNB (BNB) $ 581.02 0.54%
solana
Solana (SOL) $ 124.76 0.36%
usd-coin
USDC (USDC) $ 1.00 0.01%
cardano
Cardano (ADA) $ 0.709859 1.46%
dogecoin
Dogecoin (DOGE) $ 0.168219 0.86%
tron
TRON (TRX) $ 0.223799 0.51%
staked-ether
Lido Staked Ether (STETH) $ 1,889.86 0.76%
pi-network
Pi Network (PI) $ 1.68 1.67%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 81,806.92 1.75%
leo-token
LEO Token (LEO) $ 9.72 0.34%
chainlink
Chainlink (LINK) $ 13.33 0.79%
stellar
Stellar (XLM) $ 0.272438 2.44%
usds
USDS (USDS) $ 1.00 0.05%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,260.46 1.19%
hedera-hashgraph
Hedera (HBAR) $ 0.188737 3.49%
avalanche-2
Avalanche (AVAX) $ 18.61 0.90%
shiba-inu
Shiba Inu (SHIB) $ 0.000013 2.63%
the-open-network
Toncoin (TON) $ 2.80 3.07%
sui
Sui (SUI) $ 2.18 3.28%
litecoin
Litecoin (LTC) $ 88.80 1.06%
bitcoin-cash
Bitcoin Cash (BCH) $ 326.88 3.87%
mantra-dao
MANTRA (OM) $ 6.24 3.56%
polkadot
Polkadot (DOT) $ 4.03 1.63%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.01%
weth
WETH (WETH) $ 1,894.47 0.93%
binance-bridged-usdt-bnb-smart-chain
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 0.999741 0.03%
bitget-token
Bitget Token (BGB) $ 4.22 0.65%
hyperliquid
Hyperliquid (HYPE) $ 13.32 4.32%
whitebit
WhiteBIT Coin (WBT) $ 28.14 1.46%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,010.89 0.93%
monero
Monero (XMR) $ 207.85 0.25%
uniswap
Uniswap (UNI) $ 5.88 0.68%
susds
sUSDS (SUSDS) $ 1.04 0.05%
near
NEAR Protocol (NEAR) $ 2.63 2.49%
dai
Dai (DAI) $ 0.99982 0.01%
aptos
Aptos (APT) $ 5.13 0.05%
pepe
Pepe (PEPE) $ 0.000007 1.44%
ethereum-classic
Ethereum Classic (ETC) $ 18.17 2.38%
ondo-finance
Ondo (ONDO) $ 0.837382 1.87%
internet-computer
Internet Computer (ICP) $ 5.51 0.06%
okb
OKB (OKB) $ 41.93 0.76%
gatechain-token
Gate (GT) $ 20.51 1.72%
coinbase-wrapped-btc
Coinbase Wrapped BTC (CBBTC) $ 82,093.00 1.54%
aave
Aave (AAVE) $ 163.69 5.00%
mantle
Mantle (MNT) $ 0.725955 2.96%
official-trump
Official Trump (TRUMP) $ 11.62 7.62%