It has been three years since we’ve seen a move like this…
The Melt Up in U.S. stocks is well underway. And the tech darlings of the original 1990s Melt Up are showing their stuff once again.
You see, a trend in one large U.S. tech fund is accelerating. This batch of stocks recently rallied nine days in a row.
Importantly, these kinds of hot streaks often signal that the trend is strengthening. That means more gains ahead in this hot sector.
Specifically, we could see major outperformance – and easily double-digit gains – over the next year.
Let me explain…
You might not want to believe it. But trends are a powerful investing tool… maybe the most powerful.
That frustrates some folks because it’s so simple. Simple things shouldn’t work so well in the markets. But they often do.
The facts are that a rising stock tends to keep rising in the short term. And following the trend is one of the easiest ways to make money in the markets.
You can see this even more when an uptrend starts to accelerate. That’s exactly what we are seeing right now in the iShares U.S. Technology Fund (IYW).
The fund recently rallied for nine consecutive days. Take a look…
Clearly, the overall trend is moving higher. That’s no surprise with the overall market hitting new all-time highs. And in the case of tech stocks, the trend is accelerating.
The recent string of up days is the longest we’ve seen since 2017. To get an idea of how powerful these signals can be, we looked at similar cases going back to 2000.
This kind of situation has led to solid outperformance over the past two decades. It typically leads to double-digit gains over the next year. Check it out…
Since 2000, tech stocks have returned less than 6% a year. That’s a mediocre return compared with what’s possible after today’s setup…
Similar cases have led to near-6% gains in three months, 8% gains in six months, and a solid 12% gain over the next year. That’s double the gain of a classic buy-and-hold strategy.
The Melt Up is in full force. And given that, I expect we could see much bigger gains this time around.
Remember, tech stocks were the big winner of the last Melt Up. They’ve been soaring this time around too. And the hot streak we recently saw in tech stocks is a sign that there is plenty of life left in today’s market.
You want to own stocks today. And you really want to own tech stocks. Shares of IYW are an easy way to do it.
Good investing,
— Chris Igou
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Source: Daily Wealth
