Keep Betting on Technology Stocks into Yearend
With the 1st half of 2024 in the books, it’s time to focus on the back-half.
There’s a strong signal for one growth area of the market.
Keep betting on Technology stocks into yearend.
The S&P 500 closed out a monster first half, ripping 14.48%. Much of that gain is squarely attributed to the outperformance of mega-cap Tech stocks.
This has been one of our focus areas in 2024.
If you recall, back in January, we made a data-driven case to bet heavily on software and semiconductors due to a long-awaited new high being made in the S&P.
That call didn’t disappoint as the S&P 500 Packaged Software industry has gained 9.91% and the S&P 500 Semiconductors industry has soared a breathtaking 53.56% since that signal.
And we didn’t stop there. Just a month ago, we saw rare capitulation selling in Technology stocks which pointed to a monster reversion trade on the horizon.
We showed how the Technology Select SPDR Fund (XLK) often soars after forced-selling events. In-line with history, XLK is up over 9% since that datapoint fired.
Not bad! And if you think we’re jumping off the Tech train, think again.
Today, we’re going to review the sector action in the first half. Then, we’ll study why Tech stocks in particular are set to keep climbing into the remainder of the year.
Keep Betting on Technology Stocks into Yearend
Our bullish outlook coming into 2024 was grounded in evidence. Earnings were accelerating and our Big Money Index (BMI) was surging off a rare oversold reading.
That’s a recipe for outsized gains.
Stocks ripped 14.48% through the first 6-months of the year. Most of that outperformance is due to 2 specific areas.
Below details the S&P 500 1st half sector returns. Only 2 groups outperformed the index- Communications Services and Information Technology, with gains of 26.09% and 27.79% respectively:
Given Tech and Comm. Serv’s 41% weight in the S&P, it’s no surprise that wherever they go, the market surely follows.
But as they say: That was then, this is now. Let’s see what history says is potentially in store for the back half of the year.
To study this, I went back and culled all 2nd half sector returns from 2002 – 2023. The top outperforming groups are:
- Information Technology with an 8.21% jolt
- Industrials with average gains of 6.08%
- Materials with a 6.03% lift
- Financials and Consumer Discretionary with 5%+ returns
This one piece of evidence clearly says to keep betting on Technology stocks into yearend. This should be enough to wrap up today’s post and call it a day.
BUT there’s more! Let’s take this analysis a step further given today’s high-momentum environment.
Using the same 21 years of data, here’s what happens when you isolate years when the S&P 500 gains at least 10% in the first half…
Now’s the time to give your bearish friends a hug…they’ll need it after reviewing history!
When the S&P 500 gains 10%+ in the first 6-months of the year, here’s how sectors perform in the back-half of the year:
- Technology stocks rip 17.04% on average
- The Materials sector jumps 13.32%
- Discretionary names climb 11.18%
- And the Industrial group sports a 10.84% return
Fading a big bull market is never advised. Technology stocks are primed for continual gains in the months ahead.
And to make sure this narrative aligns with our money-flow data, let’s check in on our sector leaderboard.
As a reminder, each day our data ranks thousands of stocks based on 3 important criteria: fundamentals, technicals, and institutional positioning.
Here you can see how our top-ranking areas jive with today’s message. Tech, Financials, Industrials, and Discretionary find themselves in our top 5 groups:
As I say often, don’t follow the news…you’ll just miss the move.
Instead, follow history and where institutional investors are moving their capital. That’s how you find all-star stocks.
The message is simple: Keep betting on technology stocks into yearend.
Here’s the bottom line: We were one of the few bullish research shops coming into 2024. Not only that, but we also made a strong case to own semiconductors and software stocks early on.
That message is only reinforced given the strong performance in the S&P 500 in the first half.
Whenever stocks climb 10% or more through June, Technology stocks climb an impressive 17% in the final 2 quarters of the year!
That means, focus on the highest quality stocks with the best earnings growth and most importantly, have institutional sponsorship.
That’s where MAPsignals unique data lens comes into play.
Our stocks are crushing the market this year…and you can too!
If you’re a serious investor, money manager, or Registered Investment Advisor (RIA) – now’s a wonderful time to add MAPsignals research to your arsenal. Become a MAP PRO subscriber and you’ll get access to our weekly Top 20 report and so much more.
This is the report that found outlier stocks like Super Micro Computer (SMCI), Arista Networks (ANET), NVIDIA (NVDA), e.l.f. Beauty (ELF) and KLA Corp (KLAC)…and many more, years ago before they became all-stars.
Follow the Big Money!
Lastly, join me in our upcoming free webinar, Tuesday, July 16th @ 2 pm ET, in partnership with Wealth365, discussing how now is shaping up to be one of the best small-cap opportunities.
You won’t want to miss it.
Have a great 4th of July holiday!
