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Tech Profit-Panic Over?

Kevin Cook here for Reity...

Technology stocks have been getting "juiced" for profits in the past week. That may be over soon as lots of them -- and their home in the mega-cap Nasdaq 100 index -- found support at the their 50-day moving averages.

None of this is surprising. Tech strongly led the market advance this year because that's where the extraordinary earnings growth was in cloud computing, mobile devices, and automation. So there were plenty of profits to wring out.

BTD Until S&P 2500

And just as I told you to BTD (buy the dip) in mid-May, that playbook is still operative. Because that's what growth fund managers are doing, happy to take shares off the hands of earlier investors who were buying Tech a quarter or three ago.

The "tell" that this profit-panicking may soon be over is that the S&P 500 has barely budged from its new highs, solidifying support at 2420 and primed to build a base above 2400.

Bottom line: A month or two from now, many emotional investors will be chasing stocks at new highs. But disciplined investors are constructing their buy lists now, starting here.


Kevin Cook

Senior Stock Strategist, Zacks Investment Research


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