For many active traders, it is not a matter of slow bleeding in most stocks. It’s a lack of work. “I’m waiting for something to happen, Bob. I’ve been waiting for weeks. Something has to give.” This is what one defeated trader told me last week. low volume. low volatility. Ridiculously narrow driving. This is the market these days. With the S&P 500 down 1% this month, and basically flat for the quarter, the best you can tell is that the overall trend has gone from lower in 2022 to mostly sideways in 2023. There are certainly pockets of strength, But even those pockets of power are a bit dubious. It’s rare for a truly large ETF to be the star, but you’d have to give five stars to Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 index. It’s the fifth-largest ETF, with $176 billion in assets under management, is up 21% this year, has outperformed the broader S&P 500 almost all the time and still has stronger momentum than the S&P. However, even With this technology a strength, there are worrying signs. Lowry, the nation’s oldest technical analysis service, has resorted to calling the tech pool a “huge mirage.” Even as the Nasdaq 100 advances, Lowry notes, there is now negative divergence at the Nasdaq 100’s advancing decline line, “an extremely rare occurrence,” Lowry noted. “This means that even among the 100 largest stocks on the Nasdaq Composite, there has been more fall than rise over the past three months,” Lowry said. This is also true in technical sub-sectors. Modest strength at Micron, AMD, and Nvidia this quarter, for example, masked serious declines at STMicro (down 20%), Intel (down 11%), and Taiwan Semi (down 10%). Even Apple suppliers such as Qualcomm (down 17%) and Skyworks (down 17%) were not spared. However, if you own QQQ or other broad technical indexes, you’ll still be happy, and for good reason. Over the weekend, Goldman Sachs’ David Kostin reiterated his call for 2023 earnings to be slightly above consensus, largely because Big Cap tech will continue to outperform: “Big-cap tech net profit margins, which led a lot of the S&P 500 index’s margin weakness in 2022 bottomed out in the fourth quarter of 2022 and began to recover in the first quarter of 2023. Technology covers up a lot of the ills. Problems are in other sectors as well.” Lowry noted over the weekend that “fundamental indicators of market health have shown a significant deterioration from the market high in early February in recent days.” How so? Last year, the S&P Midcap 400 and S&P Smallcap 600 were 12% and 17% below last week’s highs of Feb. 2. “This leaves smaller-cap indices on the brink of new multi-month lows,” Lowry said. Others are also worried about big differences.With tech up 21% year to date and regional banks (KRE) down 40%, BTIG’s Jonathan Krinsky said, “We think we’ve reached the end of the runway where either banks need to start to recover or they need to start recovering.” Technology needs to go down.” On a note to customers this weekend. Only 46% of S&P 500 stocks were above their 200-day moving averages, hardly a sign of broad market strength. “This market tightening rarely ends well, but it’s clearly not over yet,” Frank Gretz of Wellington Shields said in a note to clients this weekend. Other factors driving the market have vanished. The story of China’s reopening is a bit of a fiasco. Oil, at $70, is not far from a new low. Cyclical sectors that reflect the broad global economy (manufactures, materials, energy) generally declined during the quarter. With megacap technology leading the charge, there is precious little left. At the back of the momentum is a second Invesco ETF, the Invesco S&P Low Volatility ETF (SPLV), a basket of 100 low-volatility stocks that typically include utilities, consumer staples and healthcare. It underperformed in the first quarter, it was an outstanding performer in the month after the banking crisis, but it’s also been sideways over the past few weeks. As for this week’s trading, Krinsky notes this week is options expiration,” which has been difficult for the markets. The SPX has been negative during the third week of May in each of the past six years, and 11 of the last 14 years for an average decline of -1.33. %”. Note: Ana Paglia, Head of ETFs and Indexed Strategies for Invesco and Managing Director of both QQQ and SPLV, will appear in the ETF Edge segment of CNBC’s Halftime Report Monday at 12:35 p.m. ET, along with Scott Ladner, President Information section of Horizon Investments.
#Big #tech #companies #hope #sideways #stock #market