By Senad Karaahmetovic
BTIG analysts see an opportunity to fade tech strength after the ongoing outperformance amid the global banking crisis.
Nasdaq 100 is up about 4.8% in March, better than the S&P 500 (-1.6% mtd) and Russell 2000 (NYSE:IWM) (-9% mtd). Investors have perceived the tech sector, and especially large-cap tech stocks, as a safe haven to hide from the crisis in the financials section.
“Our view is last week was largely about rotation, with investors selling down cyclicals and using those funds to buy perceived safe haven assets such as bonds, gold, and large cap tech/growth names,” analysts said in a note.
They remind investors that bonds are “usually the only real safe haven” in times of market turmoil and “certainly not growth equities.”
“In bear markets, which we still believe we are in, divergences are typically resolved with the strong catching down to the weak. The opposite is typically true in bull markets. Therefore, we would look to fade the recent strength in large-cap tech/growth and look for it to 'catch-down' to the weakness in small-caps and value,” analysts added.