Are Technology Stocks Attractive?

By John Del Vecchio and Brad Lamensdorf

Technology stocks have taken a beating to start 2022. It has been a bloodbath.

The truth is it has been a bloodbath for technology stocks for months.

Only the largest stocks in the major indexes held up, which masked a massive deterioration in the average technology stock.

Now the market has come after the prominent technology companies, and the Nasdaq indices are taking it on the chin.

Institutional investors are shedding technology shares and are as underweight the sector as in 2008. Right before lift-off.

The chart below shows that technology allocations have fallen sharply.

This may suggest that technology stocks are becoming attractive as a contrarian play.

The market is deeply oversold after the recent pounding in technology stocks. Our favorite short-term indicator, the Short-Term Composite , courtesy of Investors Intelligence ended last week at 6.9.

Could the indicator go lower?

Yes.

But, much lower.

Tech stocks are poised for a big bounce.