NQ at the daily.
The NQ transitioned into a new price structure. However, the structure is still pretty vague compared to the last trend. For now, the NQ seems to be trapped in a wedge .
There is a definite rotation between tech and non-tech sectors. Investors remain overall bullish in tech and bearish in non-tech. As a result, non-tech sectors like financials and energy were overly shorted. Eventually, if there enough shorts piled up, the price tends to snap back in the other direction. Currently, short interest is still pretty high in non-tech sectors. With a lot of trapped shorts, selloffs in non-tech sectors will be hard to maintain.
Why is there a shift? Well, look at it simply. Why pay overly priced tech stocks when you can buy bank or industrial stocks at a discount? It's not like banks or industrial companies are just going to disappear all together. Investors know that the stocks will recover eventually. They are called cyclical stocks for a reason. The best time to buy is right after a big crash - historically speaking.
What does it mean? The tech sector's rapid growth will remain muted unless 1) the rotation ends completely which may last a while and in waves. Or 2) There is a nationwide lockdown again. Some states, yes. All states, not probable at all. Why? Different industries cannot afford a lockdown. Tech can adapt to a lockdown. Industrial/manufacturing cannot. Some states have manufacturing as their economy. To a blue collar worker or small business owner, what difference does it make between catching the virus (possible death) or be locked down and starve to death? I ask that because my family is primarily made of those two. Quite frankly, people are getting tired of hearing about the virus anyways. The top concern? Feeding their families in the middle of this recession.
The NQ transitioned into a new price structure. However, the structure is still pretty vague compared to the last trend. For now, the NQ seems to be trapped in a wedge .
There is a definite rotation between tech and non-tech sectors. Investors remain overall bullish in tech and bearish in non-tech. As a result, non-tech sectors like financials and energy were overly shorted. Eventually, if there enough shorts piled up, the price tends to snap back in the other direction. Currently, short interest is still pretty high in non-tech sectors. With a lot of trapped shorts, selloffs in non-tech sectors will be hard to maintain.
Why is there a shift? Well, look at it simply. Why pay overly priced tech stocks when you can buy bank or industrial stocks at a discount? It's not like banks or industrial companies are just going to disappear all together. Investors know that the stocks will recover eventually. They are called cyclical stocks for a reason. The best time to buy is right after a big crash - historically speaking.
What does it mean? The tech sector's rapid growth will remain muted unless 1) the rotation ends completely which may last a while and in waves. Or 2) There is a nationwide lockdown again. Some states, yes. All states, not probable at all. Why? Different industries cannot afford a lockdown. Tech can adapt to a lockdown. Industrial/manufacturing cannot. Some states have manufacturing as their economy. To a blue collar worker or small business owner, what difference does it make between catching the virus (possible death) or be locked down and starve to death? I ask that because my family is primarily made of those two. Quite frankly, people are getting tired of hearing about the virus anyways. The top concern? Feeding their families in the middle of this recession.