Lots of angst around the QQQ’s and the “head-and-shoulders” that looks to be in place (according to some technicians).<\/p>\n
The June 8th reversal for the semiconductor sector and the QQQ’s was significant.<\/p>\n
Here is how the Q’s and some key Technology holdings fared in June ’17:<\/p>\n
Apple is 11.5% of the QQQ’s market-cap weighting, so as Apple goes so goes the Q’s, to a large degree and even the Sp 500 as Apple’s weight in the SPY is the single largest position at 3.6%.<\/p>\n
However, there was no question that the selling and key reversal’s that started June 8th and 9th, started with the semiconductor group i.e. Nvidia, et al.<\/p>\n
As of June 30th, Technology led all 11 sectors of the SP 500 in terms of YTD returns:<\/p>\n
Source: Bespoke Research<\/p>\n
More than doubling the SP 500’s YTD return, Tech and Large-Cap and Growth are the clear leaders this year after lagging the small-cap asset class last year. (:Last year the Russell 2000 was up over 20% and the Nasdaq and Nasdaq 100 rose just 6% – 7% for calendar 2016. The opposite has happened this year.)<\/p>\n
So I’ll ask again \u00a0– rhetorically – is this just a temporary correction in the Tech sector, or is something more sinister afoot ?<\/p>\n
Let’s go to the earnings estimates:<\/p>\n
FC – TechandFincials63017<\/a><\/p>\n Study this Excel spreadsheet for a minute:<\/p>\n 1.) Note how there has been no erosion in forward Technology estimates for Q2, Q3 and Q4 ’17. That does NOT mean there isn’t a negative surprise in the sector awaiting investors, it just means that – even with the corrections within the Q’s and Technology – there is no downward pressure YET on forward growth estimates, at a time where we typically see downward pressure on forward estimates.<\/p>\n This isn’t about precision – it’s about probability, and what the patterns of the numbers tell this Rain Man is that Technology earnings should be fine into year-end 2017. (Based on updating this data every weekend for nearly 17 years, that is my “reasoned conclusion” and in fact it could be wrong.<\/p>\n 2.) Note the year-over-year growth estimates for the Financial sector in Q4 ’17 – that is telling me we could have a strong 2nd half or Q4 ’17 rally for the equity markets. It also tells me we could get a cap gains tax cut or some other “market-friendly” action that would impact Q4 ’17 Financial sector earnings.<\/p>\n In q4 ’16, the Financial sector grew earnings 11% on 4% revenue growth, so despite a tougher compare, Q4 ’17 is still looking strong, BUT we’ll have to see what happens to the Q4 ’17 Financial sector estimates \/ data as we move through the 2nd half of ’17.<\/p>\n Our recent call on the Financial sector on this blog when pessimism was quite elevated, was pretty timely. Here are the blog post from just a few weeks ago (here<\/a> and here<\/a>).<\/p>\n Bottom Line: nothing in the earnings data tells me Technology is having anything other than a normal correction since June 8th, 9th, 2017. A separate post on Apple will be forthcoming in the next few days. Apple is such a big part of the market, its importance can’t be exaggerated.<\/p>\n Clients remain overweight Technology and Financials heading into Q2 ’17 earnings results and the back half of 2017.<\/p>\n Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":" Lots of angst around the QQQ’s and the “head-and-shoulders” that looks to be in place (according to some technicians). The…<\/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":[90,84,53,191,123],"tags":[],"class_list":["post-7032","post","type-post","status-publish","format-standard","hentry","category-apple-aapl","category-financial-sector","category-financials","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\/7032","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=7032"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7032\/revisions"}],"predecessor-version":[{"id":7039,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7032\/revisions\/7039"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7032"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7032"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7032"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}