The US markets have been trading in the red for the last three sessions and even though futures are slightly higher for tonight’s session, some may think  that the tech run is over. This is on the back of investors viewing valuations of tech stocks that have benefited from lockdown during the CoronaVirus, especially within the FAANGS, have gone too high, too quickly. These stocks could be referred to as ‘the lockdown stocks’ and have been the main drivers of the huge positive moves in indices.

Now there is chatter amongst pundits that it could be time for other sectors to start shining as economies start to open up. Some houses are referring to these as the “Re-open” stocks. In the article published in Jurrien Timmer Fidelity – “5 reason the Bull run could continue 1/09/2020″, Jurrien Timmer also points out that 3 weeks ago the S&P 500 Index gained 0.8% to a new all-time high while all 11 sectors had more decliners than advancers. Last week, all 11 sectors had stocks all in the positive.

Where is the dispersion going to come from? Well it’s going to come from two sides: Those that believe the tech bull run will dominate the markets and overshadow other sectors; and those that believe that – as the economy opens up -, other sectors like consumer discretionary, tourism, airlines etc will start to catch bids and detract the spotlight away from the huge market cap tech stocks. The US economy is out of recession and is showing signs of recovery, therefore pushing the thesis to buy the “re-open” stocks.

The market collapse in 1998 resulted in a 22% decline of the SPX. This decline was also dominated by the mega cap growth stocks just as our run upwards over the last few months has been and now the declines we have had over the last 3 sessions.

Thursday we are running a special webcast to discuss what factors can have a significant impact and where the market may head from here. We believe things are going to change dramatically, but how? 

Date: Thursday 10 September Time: 7pm AEST

Book your spot

There are three ways we believe the next stage plays out:

1. The S&P500 (essentially FAANG + Microsoft) continues dominating and shifting higher
2. Stronger economic data causes funds to flow out of tech and come into the rest of the index
3. We have a mass correction, and tech stocks fall faster than the rest of the index. 

We have designed an investment that could benefit from any of the above three scenarios.

The election will be one of the biggest influences of the change. If Biden wins he would be set to unwind a lot of the Trump agenda. If Trump wins, he may end up continuing his “war” on big tech.

Given this binary event we are positioning ourselves to benefit from either outcome. 

Book your spot to join the webcast on Thursday.

Reach Markets are the advisors assisting with the management of this offer and may receive fees depending on whether an offer is taken up by investors.