Now that the dust has somewhat settled, investors may reconsider a cheaper entry point back into the Nasdaq-100 exchange traded fund after the technology segment suffered a heavy blow.
The Invesco QQQ Trust (QQQ), which follows the tech-heavy Nasdaq-100 benchmark, declined over 3.1% Tuesday and has retreated 4.3% over the past week.
The Nasdaq has taken a hit after technology stocks plunged in the wake of the Federal Reserve’s latest minutes, which revealed that the central bank will be taking a more hawkish stance on hiking interest rates and tapering its bond-purchasing program.
Several tech stocks continued their slide on Wednesday as investors continued rotating out of high valuation names.
“Investors are trying to wrap their heads around what different leadership looks like: we’ve all been conditioned that tech is the winner all day every day and that is just not going to be the case this year,” Liz Young, head of investment strategy at SoFi, told CNBC. “Finishing out 2021, there were still a lot of investors who were overweight tech. This is a chance to really make sure that your portfolio is set up to not be overly exposed to headwinds” seen by high multiple tech.
However, after the severe blow to the technology segment, tech stocks look more appealing from a long-term standpoint.
“I absolutely love that the stocks are all looking awful. I mean that’s what you want,” Jim Cramer said on CNBC. “Some of these stocks are cut in half. I’m looking at stocks cut in half where they’re making money.” Cramer added, reiterating his investing theme for 2022, “The ones not making money I’m still not interested in.”
Cramer was also encouraged by the Nasdaq’s premarket drop on Thursday, since “eventually sellers exhaust themselves.”
“We have the makings of what could be a bottom,” Cramer added. “I think you should be looking at the techs to bottom today.”
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