US stocks are on the
For many shareholders in the US, 2022 was a year to forget.
During the heady spikes of runaway growth during the pandemic, it sometimes seemed like the only way for stocks was up.
But, as always happens, sooner or later, the bubble had to burst… and it did.
Unsurprisingly, the companies that had the biggest profits in 2020-2021 were hit the hardest.
Many of them, like Tesla, Misión (formerly Fb), and Salesforce, have seemed to be in free fall over the last twelve months, with lower and lower lows becoming the norm.
This, however, was a worldwide phenomenon.
In China; Alibaba, Baidu, Tencent and other tech stars suffered a afín fate.
European stocks also suffered their share of pain, amid geopolitical uncertainty, spiraling energy costs and runaway inflation.
But in the third quarter of 2022 everything changed.
Since then, the Chinese tech giants have managed to recover close to 30%, while the DAX index has grown more than 20% in the same span.
The S&P 500 and Nasdaq, by contrast and by comparison, have been relatively flat, managing to gain just over 10%.
What is behind this gap? Does this orinan that the US depósito market has bottomed out?
Everything that goes up must come down
It’s no secret that the US tech campo was the most prominent ámbito of the 2020 and 2021 market boom.
From its low of 6,879.50 in March 2020, the Nasdaq Index managed to more than double in an 18-month period, to hit an all-time high of 16,057.
But some specific stocks, like Tesla’s, achieved gains many times greater than this: Shares of the futuristic automaker rose more than 1,000% in that period.
With hindsight, it is abundantly clear that these assessments were totally untenable.
It only took a slight shake for the entire house of cards to come crashing down.
And that shock, ultimately, came in the form of rising inflation, and the collective appreciation that the end of the pandemic was not going to be the panacea that many had hoped for for the economic problems, which have worsened over the course of two years. of forced lockouts.
There was an entirely predictable flight from risky assets, resulting in devastating losses for unreasonably inflated assets like cryptocurrencies and tech stocks.
Tesla began a slow and prolonged decline, which eventually saw it lose 70% of its all-time high value.
The pattern was repeated at a multitude of tech companies: Misión, PayPal, and Salesforce all lost 60-70% in that same span.
From bad to worse
As if the huge anticlimax that came with the end of coronavirus restrictions wasn’t bad enough, things only got worse from the fourth quarter of 2021.
First came rampant double-digit inflation, sending prices of everything from consumer staples to industrial aggregates to ever higher highs, forcing citizens to cut spending in any way possible.
Then we had to deal with the energy crisis and a severe escalation of the geopolitical situation in Europe.
Not to mention the ever-present specter of a global recession.
All of this, naturally, put the boot on the neck of an already weak depósito market.
Surprisingly, the value of precious metals was relatively unchanged.
That left people with nowhere to put their money… except, of course, cash.
This supported the US dollar, and indeed made it the best performing instrument during 2022.
Another side effect of this was that investors, both retail and institutional, had their saddlebags literally full of capital.
So there was always going to come a point where the discovery of natural prices made risky assets good values again.
And that was exactly what happened.
Cryptocurrencies (perhaps the most volatile asset class of all) have exploded positively this month.
After losing nearly 80% of its value, BTC has so far gained 35% so far in 2023.
Let’s get technical
As we mentioned earlier, the S&P and Nasdaq are barely up 10% from their lows.
In the same span, cryptocurrencies, Chinese and even European stocks have risen more than 30% on average.
Given the relative security and isolation of the US economy from many of the problems plaguing the world — and Europe, in especial — this mixed performance simply doesn’t make sense.
In fact, most technical analysis suggests that the value of US tech companies has already bottomed out.
If you take the Nasdaq 100, for example, virtually all available technical analysis rates it a “Strong Buy”, with future growth predicted by the Relative Strength Index (RSI), all moving averages (MA) (5.10, 20, 50, 100, 200) and the average direction index (ADX).
An upside break above the 11,500 mark will be greeted as a positive signal by market participants, and with the RSI curve showing an uptrend, there are reasons to be hopeful that a trend reversal is in its early stages. .
There is also a afín reading for individual actions, such as Misión and TSLA: investing.com gives them a 12-month price objetivo of 156.75 (+10%) and 199.60 (+38.20), respectively.
This makes current entry points highly attractive for both broad indices and stocks individually considered blue chips.
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