Fundstrat’s Mark Newton joins Maggie Lake to break down why markets are rallying, and why technical analysis points to even more upside ahead. Despite recession fears and volatile headlines, Newton says the S&P 500 could hit 6,650 by year-end. He argues April marked peak fear and explains how charts (not narratives) reveal the real trends across stocks, bonds, crypto, and commodities.
Key Topics:
- Why the recent rally is more than just a bounce
- Treasury yields could fall below 4 % between June and September
- Tech and AI remain long-term secular winners
- Bitcoin may pull back before heading to $135-150 K by year-end
- Gold (target $3,750-3,800) and silver look strong heading into fall
- He also sees the U.S. dollar dipping to the low 90s before rebounding
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Mark Newton 0:00
Ignore exogenous events to the extent you can try to concentrate on trends and sector rotation, things like wars or tariffs certainly seem to spook the public, but rarely are they a means which most investors should really pay close attention to.
Maggie Lake 0:21
Hello and welcome to wealthion. I’m Maggie Lake, and today I’m joined by Mark Newton, CMT, head of technical strategy at Fun strat. Hey Mark, thanks for being with us. Hi Maggie. Thank you for having me. So this is such a headline driven market, and I think everyone all year has been dealing with all the stress around that. So I think it’s really a timely conversation to have talk to us a little bit about how technical analysis can help provide a framework in really volatile trading times. Yeah, that’s
Mark Newton 0:52
a great question and a great place to start. I think Maggie technical is obviously the study of price action, along with sentiment, seasonality, momentum and breadth and really in a way that can hopefully help all this to try to ascertain where prices are going in the future, and look at turning points, look for degrees of sector rotation. But I think most importantly, it helps to really take the blindfold off. It really helps us all to understand trends, be it whether they’re, you know, up, down or sideways. And so for portfolio managers that need help with maybe risk management, or for others that wish to speculate, you can certainly use technicals for for all of those categories. And you know, I think it’s really, really helpful, specifically in a year like this, when you know the news headlines are coming across daily that make the market seem very chaotic, that we really help to look at technicals, look at trends, and really ignore the news to the extent that we can, that serves to introduce a lot of emotion in many people’s investment process and trading, which usually are not too helpful. We honestly want to be really trying to go against the trend and go against the sentiment when it gets to be extreme, and not really pay attention to the day to day noise. I mean, we, if we learned any anything from, you know, Trump 2.0 it’s that things are rarely what we hear on day one. I mean, this is largely all a negotiation, and, you know, who knows where this is going to end up, but it’s really proper to wait until we see definitive action and, or, you know, a firm ending to this before we try to make too much in terms of being worried about, you know, additional tariffs being levied, or this or that, that those kinds of things might seem to cause volatile markets. But honestly, in the bigger scheme of things, they don’t really amount to much. I’ve always talked to investors ignore exogenous events to the extent you can try to concentrate on trends and sector rotation, things like wars or tariffs certainly seem to spook the public, but rarely are they a means which most investors should really pay close attention to. Yeah, I
Maggie Lake 3:11
think that’s, I think that’s great advice, because you could see and it’s so extreme right now, and by the way, as you’re talking about that, I think about it’s also a great point of reference when you know that some of these moves are driven by algorithms, not people, making rational decisions. So having that sort of technical analysis and and that map to go back to, I think can be a really good reference point to check against what might seem like a sort of an outsized move. So I think that’s a great reference for everyone to lean on in these times. So let’s start with the S, p5, 100, because we’ve seen really big moves. You anticipated some of this, but, I mean, this is a monster move off those lows we saw in April, even though it hasn’t felt that great. So what are you seeing? I mean, we all, I think, you know, I didn’t even realize. I think some of us if we don’t pull the lens back, it’s felt horrible, and it’s felt like we’ve been in this terrible bear market, but we’ve actually come a long way up the lows. So what are you seeing now?
Mark Newton 4:08
Yeah, the one thing I discussed with clients early on is that it was really only technology that initially had started to turn down pretty rapidly, and so the whole key was to watch technology and where it could possibly bottom out. And then the rest of the market did have sort of a final flush in late March into early April, so it was fairly, you know, damaging across the board. But you know, when you look at charts, if I can just share a chart and I’ll show you, you know what I’m looking at, it was interesting to me that, you know, the S and P largely held where it needed to, with regards to not only longer term uptrend, say, from the 2022 low, you know, those longer term uptrends pinpointed 4800 as being really, really an important point. This is also, you know, a 50% rate. Show the entire move up from 2022 up until 2025 so not to get too wonky, but that is normally something that many of us technicians do play. You know, pay very close attention to. This also marked the area near the prior bull market peak, which happened in Jan, 2022 for the S and P and, of course, back last in November 2021 for a majority of indices around the world. So this was a really, really important area. And despite the fact that people should have known about this, it did coincide, you know, with a meaningful, meaningful low in the stock market. Many times people say, Well, if too many people are looking at it, then it won’t work. And to some extent that that can be true, you can also make the opposite conclusion. Is that, you know, even if people are looking at it, people certainly make mistakes. They’re gripped by fear and emotion, and they don’t always step in to buy at a time when they should. So weekly charts held where they needed to. And when you go to, you know, a daily basis. Really, the first evidence that this could turn into something that was, you know, more powerful was when we saw prior lows being broken from March, that those were really, really key levels. And so that was right near, you know, really 5500 level. And so the fact that downtrends were broken at the same time prior lows were exceeded, to me suggested that this rally, you know, might, in fact, have some staying power and was more than a bounce. And we didn’t know that that was the case back at the time, I mean myself, along with Tom Lee, you know, expected that markets likely could stabilize and turn higher, but that was really the proof that, okay, well, we’re going to start to turn higher, and it made sense to, you know, continue to have our projections for the year mine being 6650 for the end of your target. When you look at things like wave structure, you know, we’d not really done enough damage. It was a three wave decline. And so, you know, for those of us that utilize Elliott Wave, that simply means that there is a good likelihood that markets can eventually move back to the highs. And so look at where we are now. We’re at, you know, above 5800 up 20% from those lows. You know, I don’t think you’ll hear many in the media rushing to proclaim this a bull market, even though we are officially, you know, 20% up now, because the tariffs haven’t been completely erased, and we’re still sort of in the thick of it, so that makes for a little bit of a riskier environment in the short run, because we are getting close to overbought levels. We’ve made a large move in a short period of time. But in general, you know, I would be a buyer between now and in the fall, and look to really use any sort of weakness that we get into that seasonally week, month of June, to really buy dips. So I like being long, but for those that have been long for the last couple months, it might be wise to, you know, take some off the table. Consider diversifying into things like treasuries or precious metals or utilities or things outside of technology or even emerging markets for that, for that extent, that might be able to work a little better.
Maggie Lake 8:02
So let me, let me clarify that, because so you would be a buyer, but that’s only because you were positioned for this, because you you bought at the lows, you wrote it up if you were trapped in and did not do that, then for those people, it seems like a sell, the rally, sell the RIP. Opportunity to take it, take the take the chance to diversify a bit. Is that what you’re saying
Mark Newton 8:23
not exactly only because I think we’ve seen, with regards to both Elliott wave structure, with breadth participation, with signs of the Trump pivot, and really meaningful evidence of that. You know, eventually this, this will lead to de escalation. I think we’ve seen peak fear, which happened in April, and now we’re seeing, you know, evidence of this slowly starting to be negotiated. It’s right out of, you know, the art of the deal. So while many of us would have chose to do things differently, you know, it is a pretty convincing rally. That makes me think that, you know, the next six months that we’re higher, okay, so by the time, it depends on your time frame. I know there’s a lot of people that given the day to day headlines and the extent of the move. Many people are managing money on a, you know, maybe a two or three week basis. And so for that, you know, I would say it might be wise to take some off the table for short term traders, you know, between 50 850 900 and then looking to buy dips if you can near like 55 5600, into June.
Maggie Lake 9:24
Thank you for that clarification. So it’s a time frame issue. So you mentioned that you had watched the tech sector as an indicator when that started to bottom. Is that the market that you’re watching now, or are we going to see if you’re buying the dip, or if we see the S and p5 100 higher by the end of the year. Are we seeing rotation into sectors? Are other sectors more likely to lead? You
Mark Newton 9:49
know, what’s interesting about that is that even when I when I look at the market over the last six months, the Eco weighted S and P has really performed about the same as. S P, meaning large cap dominated. S P, many it is helpful to sort of strip these larger cap companies out of the equation, so you really get a feel for not only what the sectors look like when they’re not dominated by Apple and Nvidia or Microsoft and alphabet, but really, you know, and so this we certainly have seen some outperformance since the beginning of April in the Eco weighted S P, meaning we are starting to see ever so slightly evidence of a broad based rally. And we’ve seen that in small caps since the beginning of May. To get back to the original point, though technology, when I when I look at Eco weighted tech versus eco weighted s, p, which is the way I look at sectors. You know, the longer term trends in these you know, we’re not broken on, on any sort of pullback that we saw since the middle part of last year. I mean, technology peaked in July. We sold off, but no damage was done now on a short term basis, you know, yes, we did see, of course, very meaningful damage done between February and April on a short term basis. But in the bigger scheme of things, many of these tech stocks that we all love and own that went up hundreds of percentage points might have been down 20% but they didn’t break the longer term trends many of these companies are still providing decent earnings growth. We’ve only seen minor mean reversions lower in earnings and many of them. Meanwhile, Tech has been the biggest sector that’s come back. So I tend to be bullish when I look at technically. What do I think about technology? It held where it needed to. Now it’s back up above these former lows in relative terms, that’s a good sign. Even sectors like the Sox have reclaimed these former lows that were broken. So I don’t see a move out of tech into other sectors. Per se, tech seems to be leading. But it’s also encouraging to me to see the discretionary the movement in industrials, given that dollar weakness, given the tariffs being negotiated, strengthen utility, strengthen transportation, discretionary, you know, financials, honestly, all those sectors serve to be the area for those that are sort of risk on that control the market. Financials and healthcare, you know, are about 25% of the market. Tech being over 30. So when you see financials and tech acting well, you’ve got a pretty good indication that this is a decent rally, even if you don’t see sectors like materials or staples or other ones participating.
Maggie Lake 12:35
That’s so interesting. So what are your charts tell you how do equity, US equities, look relative to the rest of the world? Because one of the big narratives when you’re talking about this sort of emotional reaction, is this idea that everyone in the world was overexposed US equities, and that that there is a sort of generational or decade long, perhaps rotation we’re on the cusp of out of us to everywhere else in the world, just other places.
Mark Newton 13:05
Yeah, thanks for that question. Maggie, I think this directly goes into this, this line of thinking we were saying before that that people had become so you know, they chosen to think that the US had lost its rally of exceptionalism. We were into a new cell, US type mode, and assets were going to flow to Asia and to Europe. And honestly, when you look at longer term charts of, say, the s&p over the All Country World Index, for example, that has continued to remain in an uptrend now on monthly basis. Yes, we did see about three and a half to four months of underperformance. But as you can see, the trends certainly have not been broken. This remains a trend that’s been very, very strong and very much intact. And so I tend to find it, you know, a combination of using just traditional technical, you know, trend analysis, coupled with extreme negative sentiment towards the US at a time when you really want to be buying into the US and thinking the US is going to snap back.
Maggie Lake 14:11
Interesting. So if you could pull a chart of treasuries up, I’d like to talk about what you’re seeing there over, you know, the course of the next few months, especially as we sort of circle through the summer. Because a lot of people are concerned, I think, about some potential for more headline risk coming over the summer. Can equities, if you think equities are going to rally, can they do that? What is that? What has to happen in treasuries in order to lay the groundwork for the S, p5, 100 to be able to move higher? Yeah.
Mark Newton 14:42
I think it’s interesting that certainly the tariff negotiation has put the fed on hold, more so now than ever. Yields, however. I mean, I think there is some, some minor evidence of some economic weakness on the fringes. The economy remains strong, but, but certainly. Uh, you know, if we see evidence in the labor market starting to get shaky, or the fact that mortgage rates are now at seven and a half percent, and people you know, can’t largely afford mortgages these days, you know, I think that’s going to put eventual pressure on housing. We have an 18 point year, 18.6 year cycle for for real estate, which last bottom 2009 it’s been very predictable, and honestly, that should be in the process of peeking out, potentially as early as next year. We’re already starting to see evidence of high supply in states like Florida and Texas, and as all people and the firms you know move down for tax advantages, and now we’re starting to see those markets start to dry up, so that the Northeast has been exempt from a lot of this, and the prices did not move up as quickly, and so they might not move down as quickly also, but, you know, purely technically, you know, short term, you can see this was our little bounce in yields, and that was quite worrisome to see minor breakouts. And this is, you know, we saw a bit, a little bit of a pullback, and this is continuing, but this is really the big line in the sand is 480 and so here’s the chart for for Treasury yields, at least on the 10 year. And so this area near 480 is going to be really, really important, but I don’t think that’s going to be tested. I do have some cycles that talk about yields starting to turn down. And I don’t know if you can see this, and I will simply share this again, just so you can see what I’m looking at. Yeah, and
Maggie Lake 16:31
I think this is so important, because we’re in an environment where the Treasury yield seems like it really matters right now, it’s really been driving sentiment and concerns around that. No,
Mark Newton 16:41
it’s less about the level of yields and more about the velocity of how quickly they either move up or move down. We certainly don’t want to see yields plunge in a way that would cause concerns about growth, but we also don’t want to see inflation rearing up in a way that would cause yields to move back above 480 and for those that argue the inflation narrative, I would simply point out that, you know, China’s recovery has proven remarkably fragile. We also see crude oil likely pulling back under $50 in the next three or four months. And I think the combination of those is going to be a tremendous offset to this whole inflationary narrative. And I think, if anything, you know, technology itself is very deflationary, and so I think that, you know, I’m not a big proponent that inflation is going to spike too dramatically. And obviously it’s going to be higher, you know, based on the tariffs in the last couple months. But I think in general, as we see the negotiation, I just personally think we probably are, you know, the break evens are where they are for a reason. You know, the market certainly does not buy into the inflationary narrative that the media is telling us. And I think that the cycles that I look at show yields actually peaking out here and pulling back very sharply into this fall. So I think that means that yields go back down under 4% I know we’re at 460 and that seems like a big call, but I sense that we are going to start to turn lower. So whether that be because of economic weakness or otherwise, the cycles don’t lie. They’ve been very, very good over the years. For me, they seem to suggest that it’s right to be long treasuries, and particularly for those that are too overweight in technology. Maybe it makes sense to consider some Treasury exposure with yields where they are, but I don’t sense that we’re going to move up right away.
Maggie Lake 18:36
That’s so interesting. What time frame do you think that 4% handle comes in. Is it summer? It
Mark Newton 18:43
happens between between June and probably September of this year. So I think the move down in yields happens over the next few months. So I’d be actually, you know, as I said, a buyer of treasuries with with yields up near 460 to 470 and, you know, I think that we aren’t going to see an immediate that that would certainly go against my own narrative, and that would certainly scoop the market. So for those that are bearish on equities or want the market to move lower, or even bearish on treasuries, 480 is sort of the big line in the sand, where, if we get above that, then we’re going to see the market definitely will be spooked, and I think percent will take further steps to try to, you know, do what they can to get yields lower. I mean, you know, we have $37 trillion in debt, and 10 trillion of that comes up this year that needs to be refinanced. So it’s certainly helpful for the administration to do whatever they can to get yields down, you know, in the months to come, given that we’re, you know, a year ahead of midterms, it’s a very risky strategy in general, embarking on on tariffs, high risk, high reward, potentially. But, you know, I think that yields are going to start to pull back in the months to come.
Maggie Lake 19:58
Yeah, and it’s going to be very interesting. Interesting to see this play out against the context of having yet a budget through Congress. This is, this is why people are watching this part of the market really closely. And you know, back to that headline risk we talked about, right? Well, and
Mark Newton 20:11
I look trends are positive, I suggest that investors don’t pay attention to that what they consider to be headline risk. Those things, obviously, if the US were to default or we have an issue with the debt ceiling. You know, that comes down to where you lie on the ideological scale of whether you want to cut spending or whether that can be done. Certainly risky to attempt to go about. You know, austerity combining with deportations, you know, all in one year, and think that we can cut spending dramatically, and now a sudden, do tariffs? You know, it’s sort of a 123, combo that makes it very tricky, but you have to stick with trends and technicals. And you know, technology has largely proven immune. It’s rallied substantially and still looks very attractive to me. What
Maggie Lake 20:58
about the dollar? The US Dollar again, as as we go through the year, we’ve seen that moving on headlines. We saw some very rapid changes in the dollar, again, some Asian currencies. So again, a lot of volatility in that market. What are your charts telling you? Yeah.
Mark Newton 21:15
So here’s a chart of the dollar index, just going back since, let me stop sharing, and I’ll reshare this again, just so you can see what I’m seeing.
Maggie Lake 21:26
And again, I think this comes against a, you know, the idea that maybe the dollar is in a new, sort of lower range, you know, maybe a bear market for the dollar. Well,
Mark Newton 21:37
I don’t know if I can make that argument honestly. I mean, we did peak out in 2022 and it’s been very choppy since that time, but, but I don’t see, you know, when you look at long term charts like I think it’s really important for all of us to do, you know, here’s our here’s our trend in the dollar. So you know, we could honestly get down to right near 94 without doing any sort of longer term technical damage. And I think that probably is possible. I think we probably go from an area of, you know, 101, 60, not up too much more before we start to turn down, and we get down to the low 90s. And at that time, I think it’s right to be, you know, sell the euro, sell Sterling. You know, look to sell yen and be long the US. Dollar
Maggie Lake 22:26
is why it’s so important to pull up the charts and look at the charts, because it is very easy to get sucked into, you know, some of these narratives, and they’re very compelling. But as you say, it’s pretty clear, you know what that line is showing us. So that’s, yeah.
Mark Newton 22:40
I mean, the number one lesson I always tell people is, no, please don’t look at an hourly or a daily chart without putting things into perspective. It’s really essential to look at weekly, monthly data. You want to see the extent, you know, it seemed like a rapid sell off in the dollar, but when you look at things over the last 15 years, you see that, you know, it’s very, very contained. And yes, this is, of course, the D, x, y, which is, you know, 63% of it is against the euro, but, but generally, you know, other other currencies will show a very similar pattern that, you know, the bigger picture is that, you know, over the next few months, any decline in the dollar likely is going to be viable, in my view. And I do sense that we get that weakness, but I just don’t think it’s gonna be the start of a much larger decline in the dollar personally.
Maggie Lake 23:24
So let’s talk about and you’re probably gonna have to change your screen for this, but let’s talk about Bitcoin, right? Let’s talk about the newer currencies that are in all of our lexicon now and again. The popular narrative is that, wow, we’re finally starting to see Bitcoin decouple from risk assets and sort of behave on some of its own fundamentals. What are you seeing for Bitcoin?
Mark Newton 23:48
I don’t sense that’s the case at all. Honestly. I know that people like to think that Bitcoin is decoupling, but they both bottomed on April the seventh. That’s exactly the day the stock market bottomed. We also saw them peak out, specifically in this case, Bitcoin peaked out about three weeks prior to equities. Both of them had a choppy period from December through January, a massive decline into February, April, and then April, we bottomed and have turned higher. It’s merely just that Bitcoin moves so much quicker than many. So you have high beta, you know, high level of volatility, and then it makes its move in a very short period of time. And then usually you see consolidation. So, you know, I spoke with our investors, you know, I told Tom Lee in December, at a time of maximum Bitcoin exuberance because of a new administration, where everybody thought the infrastructure was in place. We’re gonna get Gensler to step down. All these are gonna be positives. I didn’t disagree. But you know, when I look at my smart watch and I see Bitcoin is 100,000 every two minutes, you know, the sentiment levels that I was watching were very concerning at the time, and my. Longer term cycles for crypto did suggest that Bitcoin could peak out and go from 100,000 down to right around 60,000 so we got to right around 70 or so. But there were now some signs of Bitcoin bottoming and turning back higher. So certainly the move above, you know, 83,000 or so was a big positive. Structurally, the positive, certainly more positives and negatives. With regards to longer term structure here, we haven’t done any serious amount of of consolidation. Even the pullback that we saw that appeared very serious to many, certainly held where it needed to it did not do any meaningful damage. My only concern now is that we’ve seen potentially, sort of five waves up, and I think that, you know, we could stand to see some consolidation that likely starts in mid May, and really that same period for equities, where we don’t see a move above, say, 120,000 right away. But this gives way to consolidation again, which might last about a month, and we see Bitcoin erase 38 to 50% of what it’s done since April. And that would actually be a buying opportunity. And we do that. And so I think that, you know, I’m positive my target for the year was 135 to 150 I think we’ll get there, but it’s not going to be smooth. Similar for crypto as it is with with equities. Now Bitcoin has started to lose some strength. Relatively speaking, in recent weeks, we’ve seen, since the beginning of May, a lot of the all coins start to pick up strength. I think that’s a positive, normally. That signals that, you know, the rally could be getting towards that final stage where the alts take over. But you know, I’m long, small amount of bitcoin, still. I did make some sales personally a couple days ago, and I’m waiting on pullbacks to really look to buy weakness, really sometime in mid June.
Maggie Lake 26:53
Yeah, well, I mean, the good news for folks, based on what you just said, is, if you’ve missed this, you will have an opportunity to get in at a lower rate.
Mark Newton 27:02
I think that’s that’s correct. I mean, the problem is that many people are too short term, probably in nature, they can’t stomach the 80% decline that comes about every few years, and so you have to be it’s very tricky to try to force people into a trading mentality when they’re really not and all of a sudden they’re seeing big losses, and they’re forced to sell the bottom at a time when people get fearful. And that’s precisely what happened into April, and that led to a big short covering, initially short covering rally, which now has started to gain steam. We’re seeing flows and various signs of open interest, which are all positives, but I would just argue that it’s gotten a bit extended in the near term for those that bought or owned from the mid 70s, and it’s now over 100 you know, it’s wise just to consider the extent of the movement we’re also nearing. You know, former peaks from January, these tend to have importance, technically, as levels people want to pay attention to. So that’s right near 108,000 I
Maggie Lake 27:57
think, I think you said something really important, which is stomaching those kind of declines, and why maybe do need to think of it as a risk asset? It strikes me mark that this is very important as more retail people think about coming into this, because we’re in a period right now where people are looking for or taking another look at what diversification means, maybe going into other asset classes. But you said it sounds like you have to have a high risk tolerance or understand that you don’t need your money on a short term basis. If this is something you’re going to look at based on what you’re seeing, which is still these big declines before you see another leg
Mark Newton 28:32
up, I 100% agree with that. I think that it’s right to be a long term bull on crypto. I do. I’m just more of a trader, you know, personally, so I like to try to help investors to catch swings both on the upside and the downside, but, but honestly, you know, we’ve not seen any meaningful deterioration in the longer term trends that would suggest you don’t want to be involved in crypto. It’s more just, you know, after a 20, 30% gain in a few weeks, do you want to sit with Bitcoin, if you could, you know, give half of that back in the next month, versus favoring other assets and things like gold or, you know, right now, what’s happening with technology stocks that might be more attractive.
Maggie Lake 29:10
So let’s, let’s wrap with both of those. Let’s do cold first, and then I do want to end back on technology. And so how do you expect gold to perform here, given the fact that you see treasury yields going down. You see, ultimately, the S and P moving higher. What happens to gold here?
Mark Newton 29:29
Yields pulling back. Historically, has been quite positive for precious metals, as has been a Fed rate cutting environment, and regardless of any tariff negotiation that’s caused gold to probably sell off in the near term, gold is still quite attractive. Technically, it’s still right to be involved in gold this year. I sense that we are getting late in the game for gold and silver, because they did start to move up. You know, as early as you know, 2022, most of. These bottoms so similar to recent times. You take a longer term look, and we bottomed in November of 2022 and so, you know, honestly, you know, gold has gotten fairly overbought based on many metrics, and then that started to show signs of consolidation. I still view this as being consolidation from the middle part of April. So, you know, we might have a little bit more on the downside, but I’m expecting gold goes to 3750 to 3800 that’s my target. Generally, one wants to be long precious metals into the fall, into the period of, you know, between July and October. So, you know, I think right now, we’re still in a time when the trends are very positive. You do want to be involved. I think silver is particularly interesting to me as we you know, the cycle is going to start to turn up pretty sharply for silver, which has a couple interesting implications. One is that China’s, you know, demise might not be as certain as what many people are expecting. China, obviously, with a huge demand for silver, one of the largest importers of, I think, unrefined silver in the world. So if China’s comeback is for real, and they can implement some stimulus, and we can see silver come back, it also has quite a bit of uses, not, you know, as more of an industrial metal, as we all know, than a precious metal, but I’m expecting that silver eventually will start to play catch up to gold, and that might be actually the better area between June and October. Yeah,
Maggie Lake 31:33
and I have heard that as well, so that’s interesting to see that confirmed. So let’s wrap with technology. Again. It sounds like you’re still bullish technology. Is this mag seven again, or is this a broader technology sector? Do we see another sort of subset of technology start to take the lead as we look through the rest of the year here, it is going
Mark Newton 31:57
to be important, I think, for semiconductors to really start to reassert themselves. Semis have been one of the worst areas within all of technology, and I have been openly discussing with many that it’s just not right to buy the laggards when you’re trading at or near 52 week lows trying to, you know, forecast a move from from low to high is extraordinarily difficult. It’s oftentimes a two steps forward, one step back type process. And so regardless of how cheap they might appear, software, to me, appears to be still the area that has, you know, the greatest amount of strength. And when I look at, say, ratios of, you know, software to, you know, semis, I mean, we saw a meaningful five year breakout that happened in this group, really towards the last fall, about a month ahead of the election, and that’s still ongoing. So I still tend to think you want to be involved with software and semiconductors. If you want to be involved there, you really have to look at the leaders. And so I do like Nvidia quite a bit. I like the vago Broadcom, and I would look at TSM, but the majority of the rest of the group really needs some work to be able to re establish itself. And so for the hardware, you know, I do think it’s a broad based rally in technology. To my earlier point, we’ve seen the Eco weighted technology index break out versus the s, p in equal weighted terms. So that means that it’s been all of technology. It hasn’t just been mag seven, but of the mag seven, I think stocks like Google or in alphabet certainly have been quite weak. And who knows if sort of the search engine theme has been played out, and we might need to sort of switch our thinking there. So, you know, I’m a big fan of Amazon and meta. I own them both. I like, you know, I like Tesla, and I think that’s going to be one of the largest AI plays in the years to come that will start to gain some traction once it stops becoming, I think, such a political stock.
Maggie Lake 33:55
Yeah, and I was going to ask you about the AI story, because this is, again, when we think about looking at the charts versus the narratives. One of the really strong narratives was that this is an AI bubble that’s bursting. There was too much enthusiasm. There was everybody thought there’s a moat. There’s no moat. China’s catching up. I mean, there’s lots of threads to that story, but you sound positive about a lot of the price action. How do you have what is your
Mark Newton 34:19
I think this is a secular theme Maggie. I think that AI is here to stay. I think that, you know, we’ll see leaders come and go, but this is certainly something we want to be part of and and, you know, it’s, I think it’s always popular to claim that something’s in a bubble or it should start to fade. Honestly, you know, I’ve been talking with investors for years about the fact that even though we have probably 30% of our s, p is made up of about 10 stocks or fewer than that. Now this has been the same theme that’s happened since the beginning of time. We saw back in the 20s and 30s at&t And of course, the generals, General Motors, General Electric Boeing. Uh, you know, Exxon Dupont, those were huge parts of the indices. Many people claim the market was in a bubble. They go through bull and bear markets, and you know, now we just have a new regime of new companies. But that doesn’t necessarily mean that the market’s overly vulnerable just because a certain few stocks are leading the charge. If anything, you know, we’ve seen the degree to which these companies made our lives all better, and they’re certainly still, you know, performing marvelously and showing very good earning strength. And so I, you know, I’m a big believer in the AI theme as a secular theme that’s here to stay. And so one would want to use a weakness to still embrace this, in my view. And
Maggie Lake 35:42
it sounds like you consider Tesla an AI stock, as opposed to a car company. Yeah,
Mark Newton 35:49
100% I think that, you know, it’s it’s probably not wise for analysts who cannot get a grip as to the degree that which robotaxis will eventually start to take over, or the Oculus, with regards to the robots, this is a very real thing, and what Musk has done to invest money in in battery centers all around the globe. You know, I own a Tesla. I’m a shareholder. You know, it’s amazing when you press the button and you watch it drive you home, and it’s simply, you know, I think he’s endured, you know, a bit too much criticism, and unfortunately, it’s become unfashionable to be associated with with musk. And I think he already had 15 people that were leading the company successfully to think that he was wasting his time at Doge and nothing was happening. Was probably a little rich, but I think it is a positive to see his efforts happening underneath the scenes, and probably not as publicly, just given his personality being a bit eccentric. But I’m a big believer in his vision. And you know, if you’ve read his books and understand what he’s accomplished, he oftentimes overshoots, but he he delivers and gets a lot quicker, and I think, than most people over time. So yeah, I think it’s a wonderful company, and the stock has been under a lot of pressure, and now it’s just starting to carve out lows, and finally, starting to move up a little bit. So my cycles on Tesla head pretty sharply higher from June into the rest of the year. And so I think it’s going to be one certainly, to pay close attention to and not avoid for political reasons. Fantastic
Maggie Lake 37:23
stuff. Martha, this has been, I think, such a useful conversation to get a little bit of a counter of some of the headlines and give us some more all some more tools, as I like to think of them, as we try to navigate through the summer. So so appreciate your time. Thank you so much. Love being
Mark Newton 37:38
here. Maggie, thank you very much. You Mario and everybody. Thanks.
