Technology adds five V-shaped recoveries in 30 months, and Deutsche Bank sees new turnaround

The US technology sector has racked up five V-shaped recoveries in 30 months, according to MarketWatch. Now, Deutsche Bank is betting that another turnaround is on the way and recommends an above-average weight in the sector.

The repetition of the pattern is the backdrop for the new bet. Five times, the sector has recovered quickly after major declines, and the bank wants to know if the next turnaround follows the same script, something that is of direct interest to those who follow the Nasdaq.

The point of attention, according to MarketWatch, is the positioning of investors. It is compatible with profit growth that is much slower than that of the sector itself, which indicates that current bets already reflect more modest expectations.

In Deutsche Bank's assessment, the risk-reward profile is favorable precisely because the sector has suddenly lost favor with investors. The justification, according to MarketWatch, is based on this abrupt change in mood.

In other coverage, Investing.com reports that Deutsche Bank has updated its view on the US technology sector and says the segment's sell-off has gone too far. The thesis, therefore, is based on the assessment that the recent sale was exaggerated.

What changes for the investor

For those who invest in the stock market and Nasdaq, the bank's reading forces us to separate two questions: what is already reflected in investors' positioning and what could happen if the sector gains attention again. If Deutsche Bank's vision is confirmed, the movement could be accompanied by a new V-shaped recovery, which requires discipline in entry and exit. If the sale was not excessive, as the bank maintains, the risk is the opposite, with the sector continuing to decline while profit expectations do not adjust. This article does not recommend buying or selling assets and does not project prices.

Automatically translated from Portuguese.