The US stock market is poised to expand beyond semiconductor and memory stocks, says Mark Newton, a technical strategist at Fundstrat, warning that technology has “past its skis” after an 18% rise in eight weeks and is likely to consolidate over the summer.
Speaking in a recent interview, Newton It has been identified The financial, industrial, consumer discretionary, and health care sectors are the sectors best able to catch up as technology declines. He noted that the XHS Healthcare ETF recently reached all-time highs, calling that an encouraging sign that expansion is underway.
“I’m optimistic that we can start to scale. I suspect the technology will need to ramp up sometime in June or July. It’s hard to see an 18% rally in just 8 weeks continuing at the same pace. It’s very unlikely, and we’ll need to ramp up.”
Newton said the overall market is not overextended, but many investors have been cautious amid the leadership transition at the Fed and continuing geopolitical tensions. He noted that investors who lack sufficient exposure to heavily weighted semiconductor and memory names are struggling to keep up with the S&P 500.
Newton said he is not pessimistic and expects consolidation in the technology sector between July and October to create buying opportunities ahead of the midterm elections.
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