Imagine you’re playing a trading simulation game. There’s a parabolic rally in technology on an exciting new technology. The market is 3SD overweight infotech, and semis just did a 4SD rally, bigger than any semis rally in history. Now, a megatech company issues stock (after buying back stock for years), the largest IPO in history is on deck, momentum stalls, the Fed is going to hike (oops, we thought they were cutting), companies are worried about token costs, the biggest bitcoin and crypto bulls in the world are all selling, and a new Fed Chair is about to sit down and the market consensus is that he will be dovish despite roaring inflation and a strong U.S. jobs market.
Do you go long or short the tech momentum basket?