We had another of those small degree time windows—161 days up from the early November low, which came to be known as the Trump rally. With time windows, we have issues as one never knows if it will create a low or a high. Most of the time it’s a high, but upon occasion, it will top early and create a low.
A week ago, heavily weighted tech stocks were taken to the woodshed. By far the most important market observation we could have is to see how they’ve recovered. If they don’t recover, there is little hope for the market to get a sustained leg up through the summer.
This brings us to Friday's widely-publicized "Tech Wreck." Ahead of the weekend, the massive, former market-leading FAAMG stocks (Facebook, Apple, Amazon, Microsoft and Google) led a big reversal in U.S. tech stocks. As of writing, each of those stocks is trading off over 5% from their intraday highs, and the NAsdaq 100 index of technology stocks is trading off by over 4% as a result.
Regardless of the explanation for the initial drop, the tech sector has come roaring back of late. Though still far from the lofty "Tech Bubble" peak at the start of the millennium, technology stocks recently hit their highest levels relative to the broader stock market in 15 years.
The Trump administration on Friday slammed China on a range of trade issues from its chronic industrial overcapacity to forced technology transfers and longstanding bans on U.S. beef and electronic payment services.