May Be Early to Jump on the Tech Bandwagon
Technology shares rallied post election, as the outlook for taxes and regulatory pressure may be better than expected with gridlock in Washington, but technicals and fundamentals suggest it could be premature to anticipate the end of tech's troubles. Until proven otherwise, tech appears caught in a descending triangle, having bounced off of its mid-September low with the pre-election meltdown, but still well beneath the downward-trending resistance line. Momentum made a lower low while price did not in the latest downdraft as well, sending a warning signal worth noting.
Fundamentally, the sector is set to start undershooting earnings growth relative to the rest of the index in 2021, with or without fiscal spending, which could spark second thoughts about paying a 21.8% premium to the index for the group.
Technology shares rallied post election, as the outlook for taxes and regulatory pressure may be better than expected with gridlock in Washington, but technicals and fundamentals suggest it could be premature to anticipate the end of tech's troubles. Until proven otherwise, tech appears caught in a descending triangle, having bounced off of its mid-September low with the pre-election meltdown, but still well beneath the downward-trending resistance line. Momentum made a lower low while price did not in the latest downdraft as well, sending a warning signal worth noting.
Fundamentally, the sector is set to start undershooting earnings growth relative to the rest of the index in 2021, with or without fiscal spending, which could spark second thoughts about paying a 21.8% premium to the index for the group.