Insights into the Public’s Obsession with Big-Cap Technology Shares
This measure has “officially surpassed the dot.com mania in 2000”
by Bob Stokes
Updated: July 23, 2020
Investors just can't get enough of the big technology names.
Back on June 7, the Wall Street Journal said:
Investors' Love of Tech Drives Booming Market Rally
Big and small investors are snapping up tech stocks
Our July 2 Elliott Wave Financial Forecast provided its own perspective with this chart and commentary:
Last month's issue [of the Financial Forecast] discussed the sentiment surrounding technology issues and its striking similarity to the sector's prominence in 2000. We also noted that the sector only becomes a public obsession at the most important market peaks. This chart shows that the preference for big-cap technology shares relative to the broad market has officially surpassed the dot.com mania in 2000. On July 1, the NASDAQ 100/S&P 500 ratio carried to a new all-time high.
That enthusiasm for the big names in the technology sector has persisted.
Here's a July 20 Bloomberg news item:
Nasdaq Momentum Is Hottest in 20 Years...
The Nasdaq 100 rose almost 3% [on July 20], its best day versus the S&P 500 since mid-April.
This obsession with big technology companies may continue for a time. Yet, anyone with just a cursory knowledge of financial history knows that such momentum does not last indefinitely.
Our analysts believe that the Elliott wave model can help you to prepare for the inevitable change.
As the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter, notes:
It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.
The ability to identify such junctures is remarkable enough, but the Wave Principle is the only method of analysis that also provides guidelines for forecasting.
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