Join us as we provide an update on ISM New Orders and when the bottom might occur, update the Dean’s List of 30 longs and 30 shorts, and show that expensive tech is outperforming.
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ISM New Orders took a plunge from 49.8% in Feb to 42.2% in March. We view ISM New Orders as a key signal—the bottom should roughly coincide with the trough in stock performance. Concern that orders had not bottomed kept us somewhat cautious last fall. We expect the worst could be over around June. Valuation does not yet provide sufficient support. We remain market weight tech—relative performance is good but broken charts mean absolute returns could be poor for now.
Wolfe Research Tech Strategist, Steve Milunovich, hosted a webcast with Wolfe Research Anaylst Rob Ginsberg & John Roque. Rob and John will analyze the risk/reward of tech charts, for tech overall, sectors, and stocks of interest. During volatile times, fundamental analysts need to be aware of changing trends and support levels. And aslo ask a question about any stock of interest
Brian Partridge of 451 Research discussed the technology and applications of 5G. 5G allows for three networks in one physical deployment thanks to virtualization like SDN and NFV, massive MIMO, and network slicing. We’re in early innings with new radio deployment of an existing 4G core. Covid-19 should boost long-term demand; the pain of sustained social distancing could be eased by AR/VR, distance learning will be more popular, and telemedicine should explode.
We discuss recent investor and buyer survey results, consider how last week’s rally may indicate what to own on the other side, and highlight stocks of interest and to be avoided now.
Tech’s relative performance is good, but it’s absolute is not. Our index has outperformed the last few weeks after a year of in-line with the market. However, the average stock chart looks bad following the recent bounce.
Our Wolfe Tech Universe rose 13% the past week, outperforming S&P 500’s 10% gain. Every sector beat the market, led by Services (+15%) and Semis (+14%) while Hardware lagged (+11%) in Exhibit 2. We are encouraged by better breadth as our equal-weighted index’s relative performance has improved. Top performers in a snap-back week included Sabre (+84%), Wayfair (+70%), Softbank (45%), Trend Micro (+41%), and Square (40%). Laggards were Ocado (-8%), Logitech (-8%), Micro Focus (-7%), Keysight (-6%), and Autodesk (-4%).
Every three months we perform a survey of investors regarding their views on tech trends and stocks. Results were accumulated over March 8-24. The majority believe that Covid-19 will be a problem for a few months then stocks will recover. Almost one-quarter are more pessimistic and think challenges will continue through the summer. Few take the virus lightly or think it will be much worse than the market thinks. Some 43% are trading less while 36% are trading more around core positions and 21% are making significant portfolio changes.
Wolfe Research Tech Strategist, Steve Milunovich, hosted a webcast with Brain Partridge, Research VP at 451 Research. Brian will explain 5G technology underpinnings:spectrum, radio network, edge computing, virtualized systems. He will discuss the timing of rollouts and review consumer sentiment survey results. He will also identify potential disruptions, such as edge computing and industry 4.0
451 Research performed a Voice of the Enterprise: Digital Pulse, Coronavirus Flash Survey, a quick survey designed to measure the impact of the Covid-19 coronavirus outbreak on businesses. It was conducted between March 10 and March 19 with 820 IT decision-makers.
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