The evidence is becoming clearer and clearer by the day…
It’s time to be overweight US tech stocks again.
But, this can mean a lot of things.
For me, Amazon and Tesla are “tech.” The big communications stocks are definitely “tech.”
There is some “tech” sprinkled into just about every sector, you just have to find it.
As a general rule, if it trades like a tech stock, it’s probably a tech stock.
Anyways, these are the stocks I’m on the hunt for these days.
I’m buying speculative growth names like AST SpaceMobile and Rigetti Computing.
I’m buying bitcoin and crypto-related plays like MicroStrategy and Mara.
I’m buying biotech stocks like Rythm and Soleno.
I’m adding to online retailers and consumer brands overseas like Grab in Asia and Mercado Libre in Latin America.
I’m adding Mag 7 exposure in stocks like Nvidia and Google.
We recently put trade ideas out on Palantir and Uber.
This is all “tech” to me. It’s also the stuff that’s been working the best off the lows.
But let's forget my broader view of the tech trade and talk about the specific technology sector stocks as determined by the good folks over at S&P Global and MSCI. After all, they make the rules, not me.
Whether it is semiconductors or the broader tech sector index, a lot of these stocks and groups of stocks are simply trying to fail tops relative to the S&P 500.
While that is great and I am anticipating bullish resolutions, there is one subsector that stands out and looks a lot different right now.
Here is the relative trend in Cybersecurity versus the S&P 500:
This looks like a potential bearish-to-bullish reversal pattern. In other words, a fresh shift in the primary trend that indicates more outperformance from these stocks over the long run.
I prefer big bases and reversal patterns over continuation patterns when investing in the primary trend.
One reason is because they allow me to express a bullish thesis over longer timeframes. If I'm buying the reversal pattern it means I got to the trade early or on time. I will have a better risk/reward, higher price targets, and bigger winners, all things equal.
And ideally, I will earn long-term capital gains treatment on those winners.
This is the opportunity that cybersecurity stocks are offering investors today. With tech back in the drivers seat, I want to lean into the leaders.
Now for some of my favorite vehicles. I’m long these three stocks as part of my cyber basket.
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