Health and Fitness

Stocktake: Have tech stocks bottomed?

Know-how stocks confirmed renewed weak spot final week. Was the sturdy rally within the second half of March a mere bear market rally?

Bears observe that tech stocks stay in a downtrend, with the Nasdaq rally shedding steam as soon as it approached its 200-day shifting common. Nonetheless, the size of the prior rebound – after plummeting in January and February, the Nasdaq recovered greater than half of its losses in a 15-day interval – augurs effectively for tech stocks, says SentimenTrader’s Jason Goepfert.

“Bear markets tend to see weak buying pressure that falters quickly,” says Goepfert. Throughout weak markets, it’s frequent for stocks to recuperate lower than 1 / 4 of their prior losses over a 15-day rally. Most of those rallies find yourself failing, resulting in losses and decrease lows.

In distinction, “swift and significant” retracements of declines have a “strong tendency” to happen at significant lows.

He discovered 12 situations the place tech stocks loved significantly fast rebounds. Two months later, equities had been larger on all however one event, and the danger/reward was “massively skewed to the upside”.

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