As Cyber Monday came to a close, the tech sector shot up and then declined Wednesday (11/29) morning. CNBC reports notable companies such as Facebook, Nvidia, and Micron were all down by more than 4%. The largest hit was from Micron, at more than 8%. Mike Bailey, director of research at FBB Capital Partners, told CNBC that he wonders “if there is some rotation going on” since “it’s surprising [to see] a pullback this big after such a strong fundamental performance.” CNBC also reports semiconductors took a hit on news that Morgan Stanley “lowered its ratings on several chip stocks such as Western Digital, Samsung Electronics and Taiwan Semiconductor to equal weight from overweight.”

Currently, a December spike is still a possibility, but this drop has produced some investor uneasiness. However, with the U.S. economy being in a strong position heading into December, the traditional “Santa Rally” and potential tax reform could still aid tech companies as the year comes to a close. After the Senate vote on December 5, tech companies could have more clarity on tax incentives, which could spur growth.

Sectors: Among Sector Benchmark ETFs, the average momentum score has remained around 11.4 for the last two weeks. Telecom increased last week, up 16 points. Real Estate was the only one that decreased, down by 3. Telecom remained at the bottom, while cyclicals remained near the top, suggesting that the market has a continued appetite for risk. The spread between the highest and lowest decreased from 61 to 17.

Factors: The leading Factor Benchmark ETFs increased for the week, going from 16.55 to 20. Small Size and Yield gained the most, up 6 points. Growth stayed flat. No factor lost. High Beta and Growth gained 5. Momentum and Growth led, while Fundamental and Yield remained at the bottom. Factor rankings continue to suggest a market appetite for risk. The spread between top-ranked and bottom-ranked securities decreased from 25 to 20.

Global: Among the leading Global Benchmark ETFs, the average score increased from 13.45 to 16.18 for the week. The United Kingdom gained tremendously, up 7 points. Emerging Markets was the only position to lose, down 1. China leads the group, even after dropping from 41 to 34. Japan, up 4 points, is in second. Emerging Markets, down 1, is in third. Canada, UK, and Latin America are at the bottom of the rankings.  

Two Week Edge Chart

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