Remember the way everyone was loaded up with tech stocks in 2021? Remember how it was about the only area of the market that worked? And then came early 2021 and the stocks corrected.
Tech bottomed in the spring of 2021 but the majority of those stocks that peaked in February 2021 never came back to their prior highs and if they did surpass them it wasn’t by much. You might recall that the peak reading of just over 700 new highs on the Nasdaq in February 2021 was never exceeded again.
The number of new highs contracts because individual stocks are not making new highs. Yes it is that simple.
These tech stocks then corrected again in the fall and then rallied into early November. Again, many of those stocks did not make new highs. Only this time the mega-cap tech stocks were struggling as well.
That process from the high in February until November took 10 months. And while the index enjoyed quite a rally overall the majority of stocks were already in downtrends.
Since January of this year those tech stocks have been for sale on every single rally they have had. It was in January when we first saw the peak reading of stocks making new lows at 1,790 for Nasdaq. We rallied and came down again into March where there were only about 900 new lows. We rallied and came down again, and this time new lows expanded, but look: they never got higher than January’s reading of 1,790.
The most recent low in Nasdaq found us with just about 1,100 new lows. I know that sounds like a lot because it is, but consider that it is still fewer by about 700 than we saw in January and April. Sure, the Nasdaq itself is much lower but there are stocks that have stopped going down. At least for now.
But no one cares about tech anymore. I can’t remember the last time anyone asked me about Beloved Apple (AAPL) . And remember how Meta (META) , formerly known as Facebook, was such a big deal? The stock has halved. Netflix (NFLX) ? It’s down over 70%. No one even cares.
Nope, now when I get asked about a stock, it’s Exxon Mobil (XOM) or Chevron (CVX) or some energy stock I’ve never heard of, the same way I used to get asked about these software stocks I had never heard of.
This week the commodity trade, which was over-loved, became last year’s tech stocks when they tumbled. I don’t know if they will snap right back; their charts look terrible but I do know that my inbox is filled with more folks looking to buy them than sell them. And no one asks about PayPal (PYPL) anymore.
The best news I have for those trading commodity stocks is that the Daily Sentiment Index (DSI) for copper is now at 7 so copper should bounce. But it looks more like tech a year or so ago, in my view.
My only question is if tech rallies much more, how fast will folks switch their alliances back to tech?
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