Some analysts believe a pullback in tech stocks is inevitable… and soon
On Friday 2nd July 2020, the Nasdaq closed at an all time high of 14639 – up 121% since the Covid 19 low of 23rd March 2020. The broader S&P 500 and Dow have also closed at fresh record highs benefiting from big tech gains.
Correction due?
If tech’s top stocks correct, can we expect the fallout to spread across markets due to tech dominance. The answer is a definite yes!
U.S mounts strong recovery
U.S. economic recovery has shown strength and resilience, due primarily to The Fed’s relentless fiscal assistance. There are probably more stocks gains left in the tank as I cannot clearly see any catalyst that will slow this rally.
The market is still very bullish right now. But I strongly feel adjustment is coming, and in the order of a correction. A reversal is unavoidable and I can see it hitting the markets before the summer is out.
Bond yield fluctuation
After a surge earlier this year, the 10 year yield has been trending lower. It ended the week at 1.43% on Friday 2nd July, down around 17% over the past three months. The drop has been benefiting growth stocks, particularly tech.
But, I feel this trend will change and when it does tech stocks will adjust again and the broader market will follow.
A move down is due – and soon.
Take some risk off the table – take profits.