{"id":11547,"date":"2021-05-24T16:34:07","date_gmt":"2021-05-24T22:34:07","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=11547"},"modified":"2021-05-24T16:34:07","modified_gmt":"2021-05-24T22:34:07","slug":"the-selling-tech-crowd-continues-to-grow-not-yet-convinced","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=11547","title":{"rendered":"The &#8220;Selling Tech&#8221; Crowd Continues to Grow &#8211; Not Yet Convinced"},"content":{"rendered":"<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11548\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-300x147.png\" alt=\"\" width=\"300\" height=\"147\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-300x147.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-1024x501.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-150x73.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-768x376.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-1536x752.png 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421-1600x783.png 1600w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNdaily52421.png 1909w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>This daily chart of Amazon (AMZN) &#8211; please click on to expand &#8211; shows the stock testing it&#8217;s 200-day moving and the uptrend line off the March, 2020 lows. If there is a tech chart (actually Amazon is the largest weighting in the consumer discretionary sector, but you get the point) that reads &#8220;precarious&#8221; Amazon would be it. For a better perspective perhaps, here is the weekly chart:<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11549\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-300x148.png\" alt=\"\" width=\"300\" height=\"148\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-300x148.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-1024x505.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-150x74.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-768x379.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-1536x758.png 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421-1600x789.png 1600w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/05\/AMZNweekly52421.png 1904w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>If Amazon takes out these support levels, the next big level is all the way down at $2,000 per share.<\/p>\n<p>Three prominent market voices came out last week and were negative on the Technology sector:<\/p>\n<ul>\n<li>Russ Koesterich of Blackrock is a member of the Global Asset Allocation Team and he did a CNBC interview and was negative on the tech sector. He was negative in a March &#8217;21 interview as well (hope I wasn&#8217;t watching a replay) although Russ gave a similar interview in March &#8217;21 on why there were secular reasons to like semiconductors.<\/li>\n<li>Tom Lee at FundStrat Global Advisors noted that <a href=\"https:\/\/www.youtube.com\/watch?v=_cOuyLMH4Ds\">investors probably need to take down their tech overweight<\/a> in a CNBC interview with Wilfred Frost and Sara Eisen last week. Tom&#8217;s market calls this year have been quite accurate although he has been getting more press of late for his Bitcoin prognostications ($100,000 price target by Fundstrat).<\/li>\n<li>Finally, while maybe not a household name, Gary Morrow, a very good technician often quoted on this blog (@garysmorrow), who posts to the &#8220;This Week on Wall Street&#8221; blog, is a member of the LifePro Asset Management Team, and that team has cut their Tech weighting to zero as of last week. Their model portfolio was up 100% in 2020, and had only given back 7% this year per one update I read.<\/li>\n<\/ul>\n<p>Clients can get unhappy when big capital gains are taken all at once, so the LifePro strategy of cleaning out a sector always has ramifications for taxable accounts.<\/p>\n<p>For clients with big taxable accounts. changes are usually made slowly and over a period of months.<\/p>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>Technology is still the largest weighting in the SP 500 as of this past weekend, with a 26.2% market cap weighting within the SP 500 per the IBES by Refinitiv data, so I&#8217;m willing to live with any downside for the time being. For the most part, after the June &#8217;21 earnings reports are released, which will be some of the toughest comp&#8217;s for tech (with the exception of Apple) this year, the year-over-year compares should start to normalize, and the big 5 Tech companies like Microsoft, Apple, Amazon, Facebook, and Alphabet should retain some of their their market share gains from the pandemic.<\/p>\n<p>Ed Yardeni does great SP 500 earnings work, and Ed has noted that with the March, 2000, peak and the ensuing 80% correction in the Nasdaq and large-cap growth stocks, when Technology reached it&#8217;s 33% SP 500 market cap weight in March, 2000, the &#8220;earnings weight&#8221; of Tech within the SP 500 was just 13%.<\/p>\n<p>Today, with that 23% &#8211; 25% tech weighting in the SP 500, the &#8220;earnings weight&#8221; of the technology sector is much closer to the market cap weight, unlike early 2000.<\/p>\n<p>In other words, the difference between the earnings weight and market cap weight of Technology is nowhere as large in May, 2021 as it was in early 2000.<\/p>\n<p>That&#8217;s the big difference.<\/p>\n<p>Still, remember the tech sector could tread water for 12 &#8211; 18 months despite good earnings, as &#8220;PE&#8217;s compress&#8221; and the sector remains out of favor.<\/p>\n<p>Looking at EPS and revenue estimates for the Big 5 Tech companies, (and I&#8217;ll have an update in early June &#8217;21 with the May 31 estimates), Google&#8217;s EPS and revenue revisions following April&#8217;s earnings release were nothing short of blow-out revisions. Seriously, you don&#8217;t normally see upward revisions like this: on March 31, sell-side consensus EPS was expecting roughly $69 per share for 2021, but the March &#8217;21 quarter beat the consensus by $10 per share ($26 actual vs $15 expected) and the new sell-side consensus EPS estimate as of April 30, 2021 was $87.95 or almost $20 higher after earnings. ( Some of the numbers were rounded for simplicity.)<\/p>\n<p>Apple&#8217;s revisions were similar. Microsoft&#8217;s &#8220;post-earnings&#8221; revisions were probably the smallest despite the upside beat.<\/p>\n<p>Take everything you read with a grain of salt and substantial skepticism. The markets can change quickly and many times not for the better. Invest based on your own financial profile and risk tolerance.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This daily chart of Amazon (AMZN) &#8211; please click on to expand &#8211; shows the stock testing it&#8217;s 200-day moving&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[191,123],"tags":[],"class_list":["post-11547","post","type-post","status-publish","format-standard","hentry","category-qqq","category-technology"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11547"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11547\/revisions"}],"predecessor-version":[{"id":11555,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11547\/revisions\/11555"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}