Fears have been mounting this week as a general slowdown in tech stocks have threatened to stagnate the market. This week marked the first time we have seen the FANG stocks (Facebook, Apple, Netflix and Alphabet) truly hit a snag in the road. This could have a serious impact on the bull market, as CNBC reports:
Using Kensho, a hedge fund analytics tool, we looked at what happens to the market during periods when the Technology Select Sector SPDR Fund (XLK) fell 5 percent or more in one month since the beginning of the bull market. Since March 2009, a weak month for the technology sector is generally bad news for the market, according to Kensho. The study found the S&P 500 declined 17 times out of 18 instances the fund fell 5 percent or more in one month. Bottom line: When tech stocks are falling, it’s been nearly impossible during this bull market for the S&P 500 to post a gain without them participating.
If this logic holds, then we may well be on our way to the end of the bull market. This year has been almost unprecedented in terms of the market posting gains, but all good things come to an end. It may well be that this is that end.
Be sure to mitigate your risk by spreading your assets out, especially if they are concentrated in one field. To learn more about their reasons for believing this may be the end of the bull market, go to cnbc.com.
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