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Is Tech Impotence Just Getting Started? Technology weakness was on full display in 2022. After annual gains of 39, 50, and 44, and 35% respectively in 2017, 2019, 2020, and 2021 could it be the beginning of some mean reversion out of the group (and healthcare) into financials and energy? We are all aware of just how powerful energy has been in the last couple of years and notice how in 2020-21 the market cap share (for financials and energy) undercut the previous two lows near the very round 20 number from 2000 and 2008. Was that a blowoff bottom for energy and financials, as the latter may benefit from rising interest rates too? Notice the dark blue line that began at 20% and rose to 36% took several years before it peaked. Perhaps this is values time to shine against growth that we have heard all too much about. If that is the case let's take a look at one name from each sector that we think has outperformed its peers and will continue to do so going forward.

"Many problems are minor when you solve them right away, but grow into an enormous conflict when you let them linger." -James Clear Unlucky Number 13: The above quote is attributable to what can potentially happen in bear markets if you do not honor PRICE action. Below is a chart of the annual returns of the XLY from 1stock1.com, and notice 2022 will put an end to a very impressive 13-year winning streak (2018 barely eked out a gain). Technology is the only other major S&P sector that almost matched that feat, but fell by a scant .3% in 2018. Notice negative yearly returns for the XLY tend to come in bunches with 5 of the 9 years between 2000-2008 being down, with some significantly. Is this a sign that the consumer sector is in for a rough patch over the next several years? Of course, we will not learn of that until hindsight. AMZN will have a big say in that although the more it declines the lesser the bearish impact will be. But the chart is sporting a bear flag and a move below 85 will carry a measured move to the very round 50 number. Both AMZN and TSLA recorded stock splits this year and in recent times stocks have not fared well following them.

"If you think adventure is dangerous, try routine. It is lethal." Paulo Cuehlo Been Around The World And I I I: Perhaps it is time for a trip down South. Glancing through the globe this week saw some interesting divergences. Germany via the EWG ended a 9-week winning streak, and give it credit for trading above its 50 and 200-day SMA and just above its bull flag pivot of 25 (which carries a measured move to 29). EWH (Hong Kong) actually put up a very solid week relatively speaking up almost 4%. A region that fell along with our domestic markets but is showing very good relative strength is Mexico. It is the only ETF currently less than 10% off its most recent 52-week highs, sitting 8% off its peak in early April (more than half of that came in just the last 2 weeks that slipped a combined 4.6%). That was the scene of a bearish engulfing candle the week ending 4/8 that slipped 4%. On 12/1 it recorded a bearish doji candle and has been somewhat soft since. An individual name I like in the country is FMX. It has quickly traded from 60 to 80 and has advanced 9 of the last 11 weeks. But I still think EWW at 50.50 is a solid idea into year-end.

"In the end, only three things matter: how much you loved, how gently you lived, and how gracefully you let go of the things not meant for you."  Jack Kornfield Nasdaq Charm: The above quote is relevant to the markets here in the last third of the sentence. Of course, there is no guarantee that the bear market action is over, but one has to be open-minded that their negative bias may be incorrect going forward. Below is the MONTHLY chart of the Nasdaq and with November ending this past Thursday and providing a MONTHLY candle, it suggests that a new "growth" phase could be upon us. At least good risk/reward exists with the CLOSE back above its upward-sloping 50-day SMA which has signaled the end of drawdowns three times prior dating back to 2016 after bullish MONTHLY candles were recorded. The range top to bottom for the Nasdaq in November was 12% and it CLOSED less than 25 handles from the highs. The bearish gravestone doji recorded in November 2021 warranted caution and could this November's hammer propose risk is back on? Time will tell.

Dog No More? The software names have been among some of the wobbliest in the tech sector. With one month left in 2022, many are looking to put the year in the rearview mirror. Will the space be hit with year-end tax selling and see further declines? Stocks down more than 70% YTD, not a typo, include TWLO ASAN and COIN. Other larger cap names that were pulled down with the overall weight are ADBE CRWD TEAM DOCU WDAY and INTU. Looking at the MONTHLY chart below of DDOG, could this name be looked at as a turnaround candidate? Of course, only PRICE will let us know but the round 70 level has been influential in the past and will likely continue to do so. Last month it traded with an intramonth low of 66.45 but CLOSED just below 76. In May 2021 it touched the number and went on to advance 7 consecutive months. If it can stay north of 70 perhaps 2023 will look kindly on this name. Its daily chart on Wednesday recorded a bullish engulfing candle, which also filled in a gap from the 11/9 session. The bulls song theme for 2023 could be "Who Let The Dogs Out." If the level fails to hold look out below.