Fear The Narrow Tech Bull?

We tend to get bent out of shape and otherwise pretend it's an affront to nature when equity rallies are narrow and gains concentrated. Certainly, a concentrated market can be perilous. Mathematically, if two or three or five names are responsible for the vast majority of an index's performance and something bad happens to undermine those names, the index is in jeopardy unless and until other stocks pick up the dropped baton. Relatedly, it's not ideal when the decomposition of returns for an i

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One thought on “Fear The Narrow Tech Bull?”

Better-looking charts are spreading to non-big-tech, including cyclicals and down-cap. In industries as disparate as airlines, transports, retailers, there are stocks going up and stocks seeming to bottom, not uniformly as there are also stocks still trending down, but if you buy charts there are charts to buy. Some of those names even have not-stupid valuations.

Is it risky to get lured into small-cap cyclicals at this point? You’re hoping that a bunch of time-tested macro signals are wrong and that it is “different this time”. With S&P 600 at 14X PE NTM vs S&P 500 at 19x, is it more risky than chasing large-cap tech? The steely-eyed square-jawed bears aren’t buying either, I suppose.