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TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)

By Jeffrey Marcus | July 28, 2020

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Tech Troubles, TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)

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Tech Troubles, TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)

Turning Point Analytics utilizes a time-tested, real-world strategy that optimizes the clients entry and exit points and adds alpha. TPA defines each stock as Trend or Range to identify actionable inflection points.


Tech Troubles Are Short-Term

LONG-TERM PERFORMANCE PATTERNS WILL RETURN

The last month and especially in the past week or so, a new performance pattern has emerged.  Large TECH stocks have been underperforming. This pattern was already in place when INTC dropped 16% on Friday.

The table below shows that TPA’s BIGTECH Index was down 6.3% in the past 5 days, while the S&P500 was basically flat in the same timeframe. There is no doubt that BIGTECH got ahead of itself and deserved to take a short-term breather. In the past 6 months, the TPA BIGTECH index is up 40%, while the S&P500 is virtually unchanged in the same period. TPA warns clients not to be fooled by BIGTECH’s short-term pullback.

There is a reason why BIGTECH was outperforming by so much.  As discussed in Friday’s World Snapshot, BIGTECH has become a safe haven for many investors who need to be invested in stocks, while the economic future remains a huge question mark.  TPA believes the following 3 things are a reasonable bet:

  1. The economic situation will not improve soon given the pattern of new cases of Covid-19.
  2. Large asset managers will continue to be fully invested as long as there are not wholesale liquidations by investors
  3. Large TECH stocks will continue to be seen as a safer place to invest than most other sectors

Because of 1 through 3 BIGTECH will continue to outperform.

Tech Troubles, TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)

Risk Shift

The second table below from the Risk Dashboard, shows that in the 5-day and 1-month period Growth has underperformed value. The table also shows that recently there has been a performance shift away from the longer-term winners of TECH, and Communications and toward Energy and Financial.

Consumer Discretionary has remained strong, as it should. The largest holdings in Consumer Discretionary are AMZN, HD, and MCD, 3 businesses that have remained open throughout the pandemic. TPA warns clients not to fall into the trap and believe that the woes of Energy and Financials are over.

Tech Troubles, TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)

Top 10 Buys & Sells

Tech Troubles, TPA Analytics: Tech Troubles Are Short-Term (Top 10 Buys/Sells)


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Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.

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2020/07/28
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