Home > Business > A strong year-end rally lies ahead. It’s time to ‘rotate within the tech sector’ — away from FAANG stocks, strategist says

A strong year-end rally lies ahead. It’s time to ‘rotate within the tech sector’ — away from FAANG stocks, strategist says

55 Views

It may be time to rotate away from the ‘megacap’ tech names, Millet Tabak says.


damien meyer/Agence France-Presse/Getty Images

A strong year-end rally lies ahead but investors should rotate within the tech sector and reduce their exposure to the “megacap” names, according to one strategist.

Miller Tabak’s chief market strategist Matt Maley said some rotation within the technology sector was a good idea for the rest of the year, most notably into chip stocks.

The asset manager stuck to its belief that a “strong year-end rally” was ahead, with history indicating markets tend to rally at the end of election years and the Federal Reserve ready to provide plenty of liquidity. 

However, after the FAANG stocks — Facebook
FB,
-3.22%
,
Apple
AAPL,
+0.34%
,
Amazon
AMZN,
-3.02%
,
Netflix
NFLX,
+2.50%
,
and Google parent Alphabet
GOOG,
-1.48%

— rallied in election week, Maley said it was time for investors to reduce their exposure to the “megacap” names. While he recommended rotating into value, he said it wasn’t time for investors to abandon the tech sector altogether, in a note Saturday.

“There’s no question that it was a strong rally, but quite a few other tech stocks saw very nice gains as well. In fact, many of those “other” tech stocks have broken to new highs, while only one FAANG stock [Alphabet] did the same thing.”

Chip maker Micron
MU,
-1.05%

looked “very enticing” on a technical basis, he said, as it was testing its June and July highs after being hit in August. Its peers Nvidia
NVDA,
-4.31%
,
Texas Instruments
TXN,
-0.53%
,
AMD
AMD,
-5.08%
,
and Taiwan Semiconductor
TSM,
-1.79%

also enjoyed breakouts last week, Maley noted.

“This does not mean that FAANG names cannot rally further in a year-end rally. However with other tech stocks making new highs…and with the “momentum-driven” strategies becoming so prevalent recently, we believe that a lot of that momentum money [will] no longer go into those small number of FAANG names. Instead it will be more spread out,” he said.

“In fact, we think more of that money will likely go to the names that are actually breaking to new all-time highs,” he added.

After strong gains last week, the markets finally had the first chance to react this week to a Biden win, which is according to the Associated Press and other media outlets, following days, and even months, of uncertainty.

But that wasn’t even investors’ main focus, however, as drugmaker Pfizer and biotechnology company BioNTech said their vaccine candidate was more than 90% effective in preventing COVID-19., sending stocks surging on Monday.

Source link

TAGS , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Hi guys, this is Kimmy, I started LicensetoBlog to help you with the latest updated news about the world with daily updates from all leading news sources. Beside, I love to write about several niches like health, business, finance, travel, automation, parenting and about other useful topics to keep you find the the original information on any particular topic. Hope you will find LicensetoBlog helpful in various ways. Keep blogging and help us grow as a community for internet lovers.