The Best Nasdaq Run Since 2009 Is Coming to an End

  • UBS says ‘the difference now is central banks’ turning hawkish
  • Leuthold sees market breadth boding well for second half

All good things must come to an end. Or is it a pause?

Either way, recent convulsions in tech shares are virtually certain to saddle the Nasdaq 100 Stock Index with a loss in June, snapping the longest streak of monthly gains since 2009. The gauge is down 2.2 percent since May 31, poised for the biggest retreat in a year.

Now the question to investors is whether the weakness is a natural reversion from higher prices or a sign of broader drawdowns to come. Here are a few things strategists and traders will be following, with charts: 

  • Julian Emanuel, executive director of equity and derivatives strategy at UBS: “The difference now is central banks have become far more aggressive in their hawkishness. Tech can’t rebound at this moment if yields are going higher in the near-term. You have an informational vacuum the next few weeks and there is still a residual tendency by our clients to be defensive about tech. We think the group will stay under pressure until yields go back up.”
  • Kevin Kelly, chief investment officer at Recon Capital Partners LLC: “Tech volatility went below that of the S&P 500. VXN went below VIX. Tech started rolling over because it ran so far so fast and economic data hasn’t adjusted to share-price gains. We’re also getting to a point where the biggest buyers of tech shares are the companies themselves but we’re about to go into a black-out period for that.”
  • Doug Ramsey, chief investment officer at Leuthold Weeden Group, says odds of more gains in the second half of the year look “reasonable” due to strong market breadth on the S&P 500 Index and NYSE that made all-time highs on June 19 and 28th, respectively.
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