FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews
42 648.00

Can tech stocks stop the rot?

4 September 2020

US stocks are set to fall further on Friday, with futures now in the red, led once more by tech stocks. The Nasdaq Composite Index saw a 4.96 percent plunge on Thursday, which was its biggest single-day decline since June 11th. The Nasdaq 100’s 5.23 percent dive yesterday was its steepest since March. The selloff was likely fuelled by concerns that its lofty valuations may prove unsustainable, triggering a wave of profit-taking which also left a trail of carnage in the options market.

From a technical perspective, the drop was necessary and healthy, as it brought the Nasdaq’s 14-day relative strength index (RSI) away from overbought levels. And such a move shouldn’t come as a surprise. Since the market began exiting the bear market in March, the index has seen a pullback whenever its RSI hits or crosses above the 70 threshold, which denotes overbought levels. This week’s drop may have been more violent given that the Nasdaq had been allowed to gather so much froth; the RSI even breached 80 earlier this week.

Perhaps market participants are rebalancing or cashing out ahead of the Labour Day weekend. How stock markets perform once trading resumes next week would be more indicative of whether a trend is truly forming.

It remains to be seen whether tech counters have had their time in the sun, and whether the rotation into laggard sectors could leave a big dent in Big Tech’s near-term performance. Even after Thursday’s selloff, valuations remain stretched, with the Nasdaq Composite Index’s PE ratio still above 60. However, should this pullback extend into a 10 percent correction, that may prove too tempting a buying opportunity for fans of Big Tech, who could then swarm back in and restore the Nasdaq to its upward trajectory.

After all, the fundamental backdrop still bears major elements that are conducive for the tech sector over the long term. The Fed is willing to let the US economy run hot, which is supportive overall of equities, while the ‘new normal’ ensures the world remains reliant on Big Tech, even as the pandemic rages on in major economies.

It’s also important to note the looming potential catalysts. A US non-farm payrolls report that reads better than the expected 1.35 million print could stop the bears in their tracks on Friday, prompting the resumption of equity gains. Then, should the next round of US fiscal stimulus be approved as the Senate reconvenes next week, that could also reignite tailwinds in benchmark US indices.



Stock Futures Soft Ahead Of Powell’s Speech
Stock Futures Soft Ahead Of Powell’s Speech

Futures in the United States and Europe are trading mildly lower today. Stock traders welcoming the view that a near-term withdrawal of quantitative easing reflects...

24 Sep 2021

Stock Futures Up Ahead Of Fed Meeting
Stock Futures Up Ahead Of Fed Meeting

Futures in the United States and Europe are trading higher today, as investors focus on China’s Evergrande whirlwind, which has even overshadowed the Federal...

22 Sep 2021

Gold's sudden glow in a falling market
Gold's sudden glow in a falling market

Gold's ability to resist the general downtrend speaks to investor confidence that global central bank policies will remain soft enough to avoid triggering a global downward asset sell-off spiral...

21 Sep 2021

Forex and Cryptocurrency Forecast for September 20-24, 2021
Forex and Cryptocurrency Forecast for September 20-24, 2021

The dollar continues to strengthen, and the EUR/USD pair moves south. Starting on Monday September 13 at 1.1810, it ends the five-day run at 1.1730. The movement...

20 Sep 2021

Gold and Silver looking into the abyss
Gold and Silver looking into the abyss

Strong US data revived bets on an imminent QE rollback from the Fed, supporting the dollar and causing bond yields to rise. The news triggered a more than 2% plunge in gold prices...

17 Sep 2021

Stocks pick up some bid after textbook SP 500 bounce
Stocks pick up some bid after textbook SP 500 bounce

European stock markets were modestly higher on Thursday after a rebound in the US and another dip for Asian equities overnight. Hong Kong down 1.7%...

16 Sep 2021

Editors' Picks

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.