over at a Dash of Insight and Weighing the Week Ahead\u00a0<\/a>has a good headline for his excellent weekly summary. We probably need a a little “rebuilding” here.<\/p>\nTechnology as a sector is expected to grow Q1 ’17 earnings and revenue +15.7% and 7.3% respectively versus -4% and -6% respectively in Q1 ’16.<\/p>\n
In Bespoke’s weekly newsletter published every Friday night, Paul Hickey and his staff usually devote a few pages to discussing SP 500 earnings: the point this week is that both Technology and Financial sectors have positive “current revisions spread” and Technology’s spread is positive to the degree that – as Bespoke concluded – “the Technology sector typically has seen weaker returns when its revisions spread is positive heading into earnings season” versus the opposite.<\/p>\n
Its another way of saying expectations are high for this week’s Technology earnings reports so investors might want to prepare for a little weakness.<\/p>\n
Analysis \/ conclusion: <\/strong><\/em>With a hat tip to Bespoke, weak compare’s versus last year and high expectations into Technology earnings should cause readers to be a little cautious and careful. However, the earnings game is a long game, and thus I dont expect to make any changes to sector weights or positions. Microsoft (MSFT) remains clients number one position and that’s been the case for several years, since ValueAct took a position in the stock in April, 2013. (ValueAct has undoutedly trimmed some of that Microsoft position since 2013.) Microsoft is a GARP (growth-at-a-reasonable-price) stock, with the added positive that in 2016, Microsoft cleared it’s early 2000 all-time-highs during the peak of the Technology and large-cap growth bubbles of $51, $52, $53 per share. (Some technicians saw a $58 print for Microsoft at some point in the late 1990’s, early 2000 but it doesn’t show up on Worden TC2000, which is my technical software. Other technicians were asked to confirm Microsoft’s all-time-high from that time period, and all tell me, $52 – $53.)<\/p>\nMicrosoft could get the added benefit of a resurgent PC sector this quarter and the software giant is also a beneficiary of any cash repatriation plan out of Congress, should that ever happen.<\/p>\n
However my own expectations seem too exuberant, so today’s summary will end there.<\/p>\n
Top two sector overweight’s remain Technology and Financial’s and the top two client holdings remain Microsoft and Schwab, and have been that way for years. Positions and weighting can change at any time.<\/p>\n
Energy’s weighting was reduced on Friday OIH was sold), to what is probably now a “market weight” at 7% or so, but with Emerging Market’s and Brazil ETF’s (EEM, VWO, EWZ), which are markets closely tied to Energy, I still feel like client’s have an indirect overweight to the sector.<\/p>\n
Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":"
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