Current Tech Sector Outlook (Cautiously Bullish)

18 окт. 2017 г.

What a year! The Fed, optimistic market assumptions regarding pro-business legislation, and a return of strong corporate earnings. I was definitely ready to go bearish when I heard the relatively hawkish statements from the Fed recently, but it looks like equities will just keep grinding up until we have some serious paradigm shifts in the markets. It's great to be writing on TV again. I think it's very healthy to write out and share our thoughts with each other :)

Basic Technicals
1. Trend is unquestionably bullish.
2. RSI and MACD in positive territory.
3. Weekly MACD is showing a potential upcoming bullish cross.
4. All EMAs have a positive slope, further indicating bullish inertia.
5. Only bearish thought I have is a possible regression to mean at some point on the EMAs.

Fundamentals
1. Solid corporate earnings.
2. Despite the Fed possibly raising rates, we know they can always step back and revert to QE style policies if the market falls.
3. No significant signs of inflation, which gives the Fed room to keep working.
4. We may actually get the pro-business tax reform/other legislation that the market has been anticipating. I'd like to think that it has been "priced in", but even a flicker of good news is used as an excuse to pump up the equity markets these days.

The main reason I'm labeling this as "neutral" is because I can't get over my skepticism of this year's bullish run-up. A reasonable pullback would be very natural in October, but trying to predict that is a fools errand. The best course of action is to continue riding the bullish trend until we see very clear signs of a minor pullback.

Cheers and happy trading!