Technicals | Jun 25 2024
By Michael Gable
We are in the final week of the financial year, where we witness the usual volatility due to quarter-end re-balancing and tax loss selling.
Our observation is that most of time we don't see all sectors of the market heading in the same direction for periods - as much as we would all like that to happen, however. Locally, our market tends to operates in two speeds where the heavyweights of banks and resources tend to take turns of moving higher - which is why our market can feel frustrating at times.
In the US, we are witnessing a move higher in a handful of tech stocks at the expense of everything else. The concern on the street is that a drop in these tech stocks will be diabolical for the market. The same concerns were being expressed at the end of 2023, but we noted at the time that if/when the tech stocks cool off, money will just flow back into resources, healthcare, and other sectors of the market.
In the case of the S&P500 Index, it should lead to shallow pullbacks, not deep corrections. This is what we have seen so far this year and we don't expect that to change. That is, when investors decide to take some money off the table in US tech, it will flow into some of the recent laggards. And stocks that look to be hopelessly broken coming into 30 June will look very interesting again in early July.
We offer a technical view on AGL Energy ((AGL)).
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