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Monday, July 17, 2023

Weekly Wrap-up & Look Ahead - Can the Tech rally continue...?

We got a nice pop on $UNH (United Health) on Friday - running to a new 1 months high, and closing up 7.24%. That was an easy call, but I'm less interested in stock picking, than finding the next sector rotation. This is a tough one, now that the powers that be are trying to drive the Dow. 

CNBC even went out of their way to publish a fake headline which I promptly called out on Twitter: : 

Speaking of Earnings 

Big Bank earnings met expectations, and while that wasn't enough to rally financials, it was a good excuse to rally Tech stocks higher.

It suddenly occurred to me over the weekend that this tech led rally is no different than the last one (at the end of 2021). 

A little history: 

Tech has been the pump 'n' dump sector of choice, since 1995. 

1.  The notorious “dot-com” bubble—also known as the tech boom or internet bubble—was a period from about 1995 to about 2001 (source

2. Tech led the rally in '08.

3. Tech led the covid money printing spree of 2020- (early) 21, along with a commodities bubble, and a speculative rally in crypto, among other things.  

4. Tech stocks led - and continue to lead - the Oct 2022 rally, into the present. 

Whatever the news is, it's used as an excuse to drive the tech bubble, and bubbles tend to continue longer than anyone would expect... 

Can the Tech rally continue...?  

I suspect this tech rally will continue into Oct. of this year, and probably even into the end of 2023, and for the same reason tech held up into the end of 2021. 

The #1 reason I expect this Tech rally to continue

The #1 reason I expect this Tech rally to continue, even after we get a pullback, is the same reason we saw tech stocks propped up into the end of 2021, and here's the reason. 

Short Term Capital Gains vs Long Term Capital Gains 

 "If you hold investments in the account for over a year, you'll pay the more favorable long-term capital gains rate: 0%, 15%, or 20%, depending on your tax bracket. If you hold an investment for a year or less, it will be subject to short-term capital gains. This is the same as your ordinary income tax bracket." (source investopedia) 

Since this rally was planned well ahead of time, and most of the money which fueled this rally was put to work between Oct. 2022, and the beginning of 2023, the powers that be aren't going to take profits until at least a year has passed. 

The #2 reason the powers that be aren't going to sell this market, is in order to attempt to help Joe Biden, and the deep state, defeat Donald Trump in the next presidential election. 

In case you haven't noticed, every Trump news flash is a negative story, while every Biden news flash is positive, and especially when it comes to the economy. 

Speak of the Devil

Take care, AA 

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