Kenny Polcari, Partner and Chief Market Strategist at SlateStone Wealth, believes that despite continued pressure on the technology sector, investors are finding stability and opportunity elsewhere.
- Polcari noted in an interview that consumer discretionary, staples, utilities, and financials were among eight of the 11 S&P 500 sectors that gained on Monday even as technology sold off.
- Meanwhile, the market strategist said that as the market is testing a “reset,” the Nasdaq could slip to 24,000.
- He added that the overall market rotation is “very healthy” as there is no evidence of a massive, all-market selloff.
Even as volatility in the technology sector has the markets making wild swings, Kenny Polcari, Partner and Chief Market Strategist at SlateStone Wealth, believes that investors are finding stability and opportunity elsewhere.
In an interview with Schwab Network on Tuesday, Polcari noted that despite continued pressure on the technology sector, consumer discretionary, staples, utilities, and financials were among eight of the 11 S&P 500 sectors that gained on Monday.
“And so there’s this move out of tech, but into other parts of the market. Investors are finding stability and opportunity,” he said.
Selloff In Tech Names Is An Opportunity, Polcari Says
Meanwhile, the market strategist said that as the market is testing a “reset,” the Nasdaq could slip to 24,000, which is about 5% lower than current levels.
He noted that while some individual stocks are “already well into bear market territory,” with some technology names down more than 20%, it has created a buying opportunity, “especially in some of the bigger, high-quality names that are getting really punished just because there’s this sense that maybe large asset managers are trying to reduce some of their exposure to tech, and so they just sell everything to bring everything in line.”
Polcari named Micron Technology (MU) as one of the top long-term picks, despite its volatility. “I think MU long term is a name I like. I own it. The firm owns it. I think you have to be willing to put up with the volatility because it’s happened multiple times,” he said, adding that “if you’re taking a long-term view, I think it’s a name that you have to have.”
Polcari also said that Apple Inc. (AAPL) was “priced to perfection,” as its quarterly revenues soared to over $114 billion despite missing margins by one percentage point. “Because look, if you look at what’s happened to Apple over the last month, while tech was under pressure, Apple’s actually making new highs, right? And so this pullback, I’m not really surprised by it. But I’m not selling my Apple,” he said.
What The Rotation Says
The market strategist believes that the overall market rotation is “very healthy” as there is no evidence of a massive, all-market selloff.
He said that while the S&P 500 market capitalization was down half a percent because of technology, the equal-weight S&P 500 was up seven-tenths of a percent due to gains in other sectors.
“And so that just suggests, again, that buyers, that investors, are finding opportunity in some other sectors going forward, right? They’re not looking for today and tomorrow. They’re long-term investors. They’re buying stuff because they think the future looks positive for them,” he said.
How Are Markets Reacting?
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500, is up more than 11% year-to-date. However, it is down about 1% so far this quarter.
Meanwhile, the Invesco QQQ Trust (QQQ), which tracks the Nasdaq, is up nearly 12% so far this year, but has declined more than 7% so far this quarter.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) is up nearly 2% quarter-to-date, and has gained nearly 9% year-to-date.
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