To The Moon

In May 2022, after large U.S. technology stocks announced their results one after another, U.S. stocks experienced the largest sell-off in 21 years. The $NASDAQ(.IXIC)$ index fell for 7 consecutive weeks, the longest decline in 21 years. A sell-off unlike anything tech stocks have ever seen.

However, in May this year, contrary to last year, almost all large-scale technology stocks performed surprisingly, and the $NASDAQ(.IXIC)$ rose steadily. Analysts believe that the rising trend of technology stocks will continue, and it is expected to usher in a bull market for U.S. stocks.

Monthly Chart, as of 30 May

Good profitability against inflation

The pandemic is gradually receding, countries around the world all reopening, and the interest rate hike cycle is coming to an end. The Q1 23 performance of technology stocks is the key to the outlook for the US stock market. This is already a consensus in the market.

Before technology stocks announced their results, Jason Draho, director of asset allocation for UBS US stocks, said that technology stocks have rebounded strongly this year, partly because of the significant decline last year, and this year has accumulated a lot of related gains, whether it can be further improved, It depends on whether the Q1 results announced by large technology stocks convince the market that these technology giants can still maintain good margins in an environment of high inflation.

In short, if the U.S. stock market is going to adjust sharply, it will appear after the results are announced. If the U.S. stock market does not fall sharply after the results are announced, then this year’s trend may be much stronger than the market expects. Favorable performance of technology stocks.

When the results of large technology stocks were announced, the market ushered in surprises. $Alphabet(GOOGL)$ , $Meta Platforms, Inc.(META)$ , the parent company of $Alphabet(GOOGL)$ , which relies on advertising revenue; $Apple(AAPL)$, which relies on sales of iPhone and related products The results of companies such as $Microsoft(MSFT)$ and $Amazon.com(AMZN)$ , which rely on cloud business revenue, both beat expectations, stimulating a significant increase in the $NASDAQ(.IXIC)$ .

Performance outperformed energy stocks, a sign of rising market

According to Ned Davis Research, a research firm, technology stocks have always been the focus of U.S. stocks, and their performance has been lagging behind energy stocks since 2020. Past data shows that whenever technology stocks lag behind energy stocks, it is often a sign of a market downturn. However, after technology stocks announced their results, their share prices have outperformed so far, and the upward trend is expected to continue, which represents the market. Confidence is increasing. Although many people still worry that the U.S. economy will fall into recession, the bull market in U.S. stocks is expected to continue and reach new highs.

Recently, more and more people believe that the bull market is coming back, but before the bull market comes, investors are often very confused about the market conditions. Due to the long-term decline in the stock market, investors are always worried about gains and losses, and are prone to panic. Some investors always say that there are still many uncertain factors in the market. In fact, when will the market be free of uncertain factors?

When the stock market starts to rise significantly, the uncertain factors in the market seem to be completely eliminated, but at this time it is the end of the rise. Even if the bull market is not over yet, the profit that can be earned is very different from buying from a low position. The performance of technology stocks is the key to the U.S. stock market this year. The performance did not cause the U.S. stock market to plummet, and the market's confidence in the market outlook is strengthening.