For Immediate Release
Chicago, IL – April 25, 2023 – Today, Zacks Investment Ideas feature highlights Nasdaq 100 ETF QQQ, Dexcom DXCM, Merck MRK, Intuitive Surgical ISRG and SPDR S&P Regional Bank ETF KRE.
Sell the News? 5 Reasons Tech May Pull Back
Let me preface what I will say with this: I do not believe in the idea of calling tops. However, when short-term caution flags arise, I take note and heed the warning the market is sending my way by pulling back exposure. With that in mind, I do not love the action here in tech land. The price action is sluggish, and some yellow and red flags are popping up here ahead of big tech earnings, including:
Weakness in Bitcoin: Bitcoin tends to provide “risk on” signals and has been a solid forward-looking indicator for tech. Over the past few months, it has led the Nasdaq in both directions. Could weakness in BTC be foreshadowing weakness in tech?
Potential for sell the news type event: Year-to-date, the Nasdaq 100 ETF is up nearly 18%. The index has an open price gap below and has yet to tag its 50-day moving average since breaking out.
Sentiment: The CNN Fear & Greed Index suggests that bullish sentiment is on the rise. Generally, bulls want to see negative or neutral sentiment so that the market can climb the proverbial “wall of worry.”
Healthcare outperformance: When the healthcare sector is strong, it tends to act as a “risk-off” gauge for the general market. While tech has lagged recently, healthcare-related names such as Dexcom, Merck and Intuitive Surgical have outperformed dramatically.
Money is moving into beaten-down sectors: At the time of this writing, the Nasdaq is down three-quarters of a percent, while the SPDR S&P Regional Bank ETF is flat on the session. Investors may be moving money from extended technology and growth stocks to beaten-down stocks that feel like discounts.
Conclusion
Though the medium-term trend remains higher in tech, there are some subtle signs beneath the surface suggesting that the space may need a brief pullback. Investors should manage their portfolio exposure accordingly and look to have some fresh powder in the event tech stocks sell off post-earnings this week.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
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Free: See Our Top Stock and 4 Runners Up >>
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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