Sector Rotation theory suggests that from market bottoms the two sectors that should lead are Consumer Discretionary and Technology. These two sectors did in fact lead the market out of the COVID crash. The next sectors to lead as the market matures are Industrials and Materials. These too followed the theory through 2020 as the bull market grew. At the market top Energy is supposed to lead and sure enough we have seen quite the run on Energy related stocks. What that means going forward if the theory holds is that Consumer Staples and Healthcare should outperform the market.
I just red an article in Barron's about tech stocks, where an analyst recommends to buy the dips in tech stocks, so i was asking myself whether it is a good idea. Here an extract, would be curious about your opinion:
Investors should use the current market weakness to ensure that Apple AAPL, Microsoft MSFT, DocuSign DOCU, Zscaler ZS, Palo Alto PANW, SailPoint SAIL, and Nuance NUAN are included in their portfolios, Ives advised.
Across the wider sector, Wedbush predicts that tech stocks will move at least 25% upward in the next year. That will be driven by big names Facebook FB, Amazon AMZN, Apple, Netflix NFLX, and Google, owned by Alphabet GOOGL, as well as cloud and cybersecurity stocks, despite the recent selloff, Ives said.
More broadly, Ives said that Uber UBER and Lyft LYFT — “disruptive tech recovery names” — remain Wedbush’s favorite “reopening plays,” with profitability on the horizon and a massive surge in food delivery.