The NASDAQ or THE COMPX is down 2.82% or 71 points today. This was after it was up 1.57% yesterday. The COMPX was down 2.01% on Friday and 2.04% on last Wednesday. This is clearly an indication that the NASDAQ/TECH run for the time being is over.
You may ask why are the techs weaker than the broader markets? My dear fellow this is because this is where the growth is! Has anyone noticed that the Shanghai Composite is down some 13.48% this year and 18% off its 52W highs? We all know that China was the big growth driver that drove the global economies out of recession. Sure central bankers helped out tossing money from the skies, but it was the original China stimulus that got things back in gear. Now that momentum is exiting China equities investors have to re-access growth globally. This is happening for one simple reason. China wants to slow their economy. They want to slow speculative lending. They have continually raised reserve requirements this year in an attempt to reign in their banks. The Chinese will not allow an overheated economy anymore than they will allow their economy to go to hell. This is what stimulus is for. I fully expect the Chinese to come out with a $500B USD stimulus sometime in late July/August. This will pull global equities out of their summer hiatus.
The NASDAQ, like I predicted last year would get us out of this funk. Now that it has, profits need to be booked. How many profits is the question? In the final analysis, the selling in tech land should filter over to other hot sectors like the REITS and Retail.
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