Bond reversal doesn’t change much as Technology continues to lead

S&P and QQQ have now rallied into and through the CPI print and FOMC meeting with little to no evidence of any trend reversal.  Treasuries did pull back from early day gains, but trends in Yields remain pointed lower along with the DXY and should aid the rally in risk assets into next week.  Sectors like Consumer Discretionary and Industrials have been strengthening, but it remains Technology that continues to show true dominance in outperforming all other sectors over the past few weeks following the recent AAPL and NVDA breakouts.  No evidence of any counter-trend exhaustion is present at this time, and barring any weakness in the indices themselves, it’s hard to find much of a technical reason to suggest selling simply based on the recent rally having gotten extended.

It’s not wrong to say that Technology has come back with such a vengeance since mid-April that many investors and Portfolio managers feel awkward about chasing the movement in some of the Tech hi-flyers.  Stocks like $AAPL, after all, are higher by 10% in just two days’ time while NVDA has pressed higher to the tune of +65% in less than two months.

Overall, the key to whether it’s right to chase a market like this has everything to do with one’s own risk tolerance and timeframe for investment.  As discussed over the past week, sentiment had become understandably subdued given the lack of clarity from FOMC guidance (lining up with what the market had priced in), and many Tech stocks have surged higher in a very short period of time.  However, the latter is rarely a reason to avoid investing, (for those with long-term timeframes) and no evidence of momentum and/or price deterioration is still visible to give investors much of a warning.

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