Are tech stocks bargins?

Tech stocks are among the ones that have been mostly beaten down this year. Once high flying stocks commonly crash over 50% or more. So are we seeing bargains in the tech sector? From the contrarian point of view this may very well be the case. The following analysis provides a good case for that. The biggest question is how to play this potential uptrend when it starts. Bottom fishing is never an easy job as volatility will remain very high. I'm personally using special option strategies to account for the volatility while staying in the course to bet for an upcoming uptrend for tech stocks.  

Technology may not be dead yet (by SentimenTrader)

Over the last couple of months, investors have been panicking. Stocks, bonds, crypto...all suffered massive losses. It seems like everyone was selling everything. But there was one group that was not, and it just so happens that group is part of the "smart money." When an individual is an officer, director, or more than 10% owner of a public company, they have to disclose to regulators when they buy or sell shares in their own companies. It's not perfect. Insiders sell for many reasons, but they usually only buy because they think business is good and their stock price will rise. Also, the data is released with a delay. But generally, it pays to buy when a lot of insiders do, and vice-versa. Among technology stocks, insider buying picked up significantly starting in November 2020. Amazingly, they kept buying heavily during the rally in 2021 and kept right on buying heavily throughout the 2022 decline. While strong insider buying continues unabated, insider selling has steadily declined over the past year. The chart below displays those weeks when there were fewer than 365 insiders selling technology stocks on the open market over a rolling 6-month period. Right now, it's nearing a 10-year low. Such low selling interest among the smart money has been a good thing for future returns in tech stocks.

What the research tells us

Forward returns in XLK after periods of high insider buying, and low selling, have been excellent. Other investors are panicking, buying and selling all tech stocks together, so the correlation among them is spiking.