Alpine Macro, an economic analyst, said that the big seven technology stocks have peaked in the short-term sell-off and are expected to rise or stabilize.
It is noteworthy that US stocks reaped their highest profits last week since October 2023, and this came in the form of a rebound and recovery from Black Monday when the US stock exchange suffered huge losses as a result of recession, weak transfer, and the belief of some investors that stocks reached their peak.
Shares of the Magnificent 7, which account for 33% of the S&P 500, fell sharply, leading analysts to believe that their prices are now oversold in the short term.
Alpine Macro’s latest analysis provides a detailed overview of these stocks across various indices. The company noted that technical and capital allocation indicators show signs of overselling, suggesting a possible recovery or at least stability in the near term.
They noted that this is particularly important given the ‘skyrocketing’ in market capitalization and stock prices over the past decade.
The investment research firm’s analysis also highlights divergence in fundamentals such as sales, margins and cash flows, which remained strong for Magnificent 7 shares compared to the rest of the market.
This divergence is said to raise questions about the sustainability of these trends, with Alpine Macro suggesting that a moderate rebound may be on the horizon.
Evaluation remains a major concern. Although the current downturn may make these stocks seem less expensive, Alpine Macro warns that they may still be ‘just expensive’ rather than being irrationally priced.
The report stresses the importance of comparing this period of market concentration with previous ones, noting that although fundamentals vary, the dominance of a few stocks is a recurring theme in the US stock markets.
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