Posted on September 16, 2022 by Scott Shuda
Chris Verrone of Strategas had a lot to say in this column a few days ago about market leadership. In particular he pointed towards the Energy Sector as fertile ground to hunt for market leaders.
He also had a few words to say about the Technology Sector. . .
“In terms of performance and leadership, tech hasn’t shown leadership in almost two years. Two years ago was the blow-off top.
Our big call all year has been ‘avoid the Semi Sector.’ The semis are finished. They were the leadership for the prior decade – they’re not leadership anymore. Nvidia, AMD Broadcom, Qualcomm had major top formations both in the absolute and the relative sense.
On the other hand. . .
Gene Munster, Founding Managing Partner at Loup Ventures takes a different view.
Is Tech a falling knife?
“We are bottoming. I’ve believed this since summer and it will last through fall. [Click here for contrary view]
“There are important numbers that outweigh the negative aspects of rising rates and this is why I ultimately remain positive on Tech and Big Tech more specifically.
“30% was the growth for the top five big tech companies last year. This year it is going to be 6% revenue growth. Next year, we should see a step up in growth, maybe 10% for the big names. Anticipation of accelerating growth is a formula for Tech stocks to go up.
“So despite the vortex that we’re in, despite the belief that we are maybe going lower from here, if you’re going to say put a stake in the ground and ask, “Where is Tech going to be six months from now?” I think it will be higher. If you say 12 months from now I think these stocks will be MEASURABLY higher.
“I think a RECESSION IS BAKED IN. If that revenue growth number for next year is higher than it is for 2022 these stocks go higher even in the face of recession.
*Bradley Steveson comments, “AEHR continues to stay strong.” Semi tester AEHR is up 25% over the last seven trading days
*Scott Shuda on the Feed posts “PESI Buying Op?” with a nicely highlighted chart. Comments Florian Buschek, “I think it is a mega opportunity. Earnings alone will bring this to $6 once the seller is exhausted IMO.”
*Bespoke Investment: Sentiment remains heavily in favor of pessimism as the streak of negative readings grows to 24 weeks long.
*Michael Kramer, Mott Capital: The TIP ETF continues to be the best leading indicator for where this market is heading, and as long as the TIP ETF keeps making new lows, the QQQ will fall. The key here is that higher real yields mean that the present value of long-duration growth assets becomes worth less.
*Fast growing Mexican airline Volaris (VLRS) may be a good buy for patient investors. Author and former airline exec Kevin W. Wilson commented, “They are now the market leader with about 42% market share. Airline stocks are cyclical and we appear to be at the bottom of the cycle. Market cap is just under $1B and they have almost $800M of cash.” VLRS closed at $8.99. I added to my position.
*The Crimson Tide of Alabama have the most players (58) on active NFL rosters for the sixth consecutive season. The next closest were LSU (52), Ohio State (52), Georgia (44) and Notre Dame (37).
“MyPillow CEO Mike Lindell stood his ground at Hardee’s. The feds got his phone, but he said if they want to take his mushroom-and-swiss Angus burger, they’ll have to come back with a warrant.” — JAMES CORDEN
Good luck to all – Chris
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