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10 Reasons This Is the Start of a New Tech Bull Market

Folks, welcome to the new bull market in tech stocks.
I know that may sound crazy to you. After all, tech stocks have been crushed throughout the first five months of 2022. But they’ve soared as of late. And there’s a mountain of e…

Folks, welcome to the new bull market in tech stocks.

I know that may sound crazy to you. After all, tech stocks have been crushed throughout the first five months of 2022. But they’ve soared as of late. And there’s a mountain of evidence suggesting why it’s not crazy to believe a new bull market is emerging. In fact, it’s our reality.

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That’s especially important news because the dawn of this new tech bull market offers the investment opportunity of a lifetime.

Bear markets are my calling card. I tend to thrive in moments like these. The biggest calls of my career — calls that allowed investors to consistently snag 1,000%-plus returns — were made during the market selloffs of 2015-2016, 2018 and 2020.

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I successfully buy dips in bear markets. It’s what I do.

This time around is no different.

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Over the past month or so, the S&P 500 has risen about 5%. But the Top 10 stocks model portfolio in my Innovation Investor stock research service has risen more than 35%!

new tech bull market

If this really is the dawn of a new tech bull market — which I’ll prove over the next few minutes — then it’s also the dawn of our Innovation Investor stocks soaring thousands of percent over the next few years.

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So, let’s dig in.

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Bull Market Indicators: A Slowing Economy and Cooling Inflation

Tech stocks have been soaring recently.

Yesterday, the tech-heavy Nasdaq popped 2.7%. And our Top 10 stocks portfolio of high-growth tech stocks rose 7%.

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Some folks think this could be a head fake — a dead-cat bounce, as they say.

But it’s not. And to prove why, we’ve compiled 10 of the most compelling datapoints underscoring the start of a new bull market.

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Those datapoints are as follows:

  • The economy is rapidly slowing. The economy got too hot in 2021. That’s partly why tech stocks have been crushed in 2022. When the economy gets too hot, the Federal Reserve steps in to put the brakes on expansion through rising rates. Higher rates lead to lower valuations and lower tech stock prices. But amid geopolitical chaos and higher interest rates over the past few months, the U.S. economy has rapidly slowed. Job growth has braked to its slowest pace since the pandemic emerged. It’s the same with consumer sentiment, existing home sales and pretty much every economic datapoint out there. The U.S. economy is slowing rapidly.

ADP payrolls

  • Inflation has peaked. For the first time since late 2020 — or since the economy has been going through its COVID normalization phase — U.S. inflation rates are dropping. In April, the two preferred measures of inflation, CPI and PCE, both decelerated on a year-over-year basis. With the economy quickly slowing and supply chains swiftly improving, inflation will keep falling over the next few months.

US Consumer Price Index

A Dovish Federal Reserve, Topped-Out Yields and Low Valuations

  • The Fed is turning dovish. Thanks to a slowing economy and cooling inflation, the once super-hawkish institution is starting to turn dovish. Over the past two weeks, three Fed voting members said it may be appropriate to reconsider the pace of rate hikes after July. That opens the door for a potential dovish pivot in Fed policy in September, which we think will happen. If it does, then that will set stocks up for huge gains through the end of the year and into 2023. Just look at the last time the central bank made a dovish pivot after a series of rate hikes.

2018 Stock Market Crash

  • Treasury yields are topping out. The math strongly supports the idea that if the Fed remains within the guardrails of seven to 11 rate hikes in 2022, Treasury yields have peaked and will move lower in the second half of 2022. Recent commentary strongly implies that the Fed will remain within those guardrails. As such, we continue to believe yields will move lower going forward, providing support for multiple expansion in tech stocks.

Government Bonds

  • Valuations have reset to historically “below-average” levels. Stocks were expensive. Now they’re not. The current price-to-earnings multiple on the S&P 500 is below both its five- and 10-year averages. This means valuations have fully reset. And so long as earnings growth remains healthy, which we suspect it will, stocks should move higher.

S&P P/E ratio

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Robust Internals, Bullish Sentiment and Insider Buying Sprees

  • Recent market internals are very strong. We recently read some illuminating research from advisory firm Market Extremes. It illustrated that the market’s May and now June comeback bid has very strong internal dynamics. Specifically, the market’s “thrust” (the ratio of upside to downside volume) has been particularly high in recent days. Market Extremes found that the market’s thrust in last week’s three-day rally was one of the strongest it has ever been over the past four decades. Historically speaking, that’s bullish because such intense periods of market thrust tend to produce strong forward returns. If history repeats, we could be looking at a 20%-plus market rally over the next 12 months.

Upside thrusts

  • Investor sentiment is recovering in a very bullish manner. An American Association of Individual Investors survey showed bullish sentiment among retail investors rose over 12 percentage points last week. That’s a record-high jump that’s only happened 11 other times over the past 10 years (525 observations). Each prior time, that jump in bullish sentiment led to a big near-term breakout in stocks. All 11 times, stocks were higher 100% of the time three months after the weekly jump in bullish sentiment. The average gain over that stretch was 5.2%.

Bullish sentiment

  • Insiders are buying the dip at a volume historically consistent with market bottoms. They’re the folks who know the most about the companies in the market. Over the past two weeks, corporate insiders have gone on a huge buying spree. In fact, insider buying has spiked to two-year highs over the past two weeks. That’s bullish because these insiders have a history of calling market bottoms. Every time insider buying has spiked like it is right now, the stock market bottomed after a major selloff.

Insider Buying

Impeccable Earnings and a Call From the Brightest Mind

  • Tech earnings have been fabulous. Over the past week, tech companies like Salesforce (NYSE:CRM), UiPath (NYSE:PATH) and Okta (Nasdaq:OKTA) have all reported excellent quarterly numbers. This trend extends into the entire tech sector, where ~90% of companies beat both revenue and earnings estimates this quarter. Technology is the world’s solution to inflation because exponential technologies are the most powerful deflationary tool ever created. As such, we believe increasingly more companies and consumers will turn toward tech in the coming years to beat inflation. Technology’s global societal, political and economic influence will grow exponentially. And tech stocks will soar.

Earnings and revenues

  • Marko said so. JPMorgan’s (NYSE:JPM) head global strategist — Marko Kolanovic — thinks stocks are will rally. He noted, “The market sold off in the first half of the year and will be followed by a gradual recovery in the second half.” That’s important because Kolanovic isn’t just another Wall Street talking head. He’s arguably one of the brightest minds in the business. He’s a strategist that’s so good, CNBC once called him “half-man, half-god.” And explicitly highlighting innovation and tech stocks, Kolanovic said, “the most attractive investment opportunities are in these oversold sectors that provide asymmetric upside.”

The Final Word on Tech’s New Bull Market

Tech stocks have been on a tear this past month, led by our Divergence portfolio, which has risen by almost 50%.

Some are calling the tech resurgence a head fake.

It’s not.

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Depressed valuations suggest that’s just not the case. And so do strong earnings, heavy insider buying, cooling inflation and heavy volume on the rallies.

Indeed, there’s a mountain of evidence to suggest that this tech resurgence is not a head fake.

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It’s the real deal.

And if it, that means it’s the best time to plug into Innovation Investor.

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We believe the stocks in that service will lead a massive market rebound in the second half of 2022. And starting today and lasting for a decade-plus, they’ll lead a new tech bull market.

One such stock is a tiny $3 biotech company that popped almost 20% yesterday alone!

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This is a stock that’s rewriting the rules of biology. It has so much upside potential that yesterday’s 20% rally will just be a blip in five years, when this stock is up around $100.

Clearly, this is a stock that you need hear about today.

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The post 10 Reasons This Is the Start of a New Tech Bull Market appeared first on InvestorPlace.

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