We are back with another article that could probably be a good thought process for you as an investor despite the market uncertainties. This article will be a short and simple one.
As usual we will be keeping it simple for you to understand. So with many things happening in global markets, two major attention seekers include
1) Increasing COVID cases with new variants
2) Increasing inflation worries which may cause value stocks to drop in price
This time we will be talking on inflation worries which as affected one particular sector --> TECHNOLOGY SECTOR
What has grabbed our attention in this sector when alot of selling has been happening lately?
Evident by the big drop in NASDAQ which represents technology stocks in the US, we know that tech stocks has faced a medium term downwards pressure and it is very rare to have them go all the way to an oversold position.
The above chart represents the technology index in Bursa Malaysia which is currently in an oversold position. As you can see in the highlighted circles, every time this sector hits an oversold position there is a big chance it will rebound to maintain its uptrend position.
This time however, it is too early to say that technology sector will resume its uptrend because inflation worries are not over.
The data below shows how high inflation in the US has shot up against analysts forecast. This actually is the core reason for the sell down in value stocks especially the technology sector.
Hence, we are in the opinion that there will be short term opportunity in the market that we can make use of on the technology stocks that has been in an oversold position but still has a great prospect looking at the developments of 5G and the increasing need of technology in essential sectors.
Some of the interesting technolgy stocks in Bursa Malaysia includes PENTA, UWC, GREATEC, FRONTKN, JHM, D&O, VIS, JFTECH, MI, KESM, VITROX and MPI. (no particular order of interest)
Technical analysis will play an
important role in order to make use of this short term opportunity.
Kindly refer to your licensed investment advisors to know if this sector
could benefit your portfolio of stocks.
This article is intended to educate you on how to take advantage on sectors that have been oversold on uncertainty but has the potential to reverse its direction based on prospects.
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Disclaimer : All notes expressed
here are solely individual point of views and we are not responsible for
any buy or sell decisions made by others. Kindly use this as a
reference reading material to add value to your current research and
pleas verify any information stated here with a licensed individual in
the capital markets industry before making any decisions.