Investors got it right piling into Big Tech, but might need new catalysts to power stocks in August

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The gaudy profits reported Apple, Amazon, and Facebook showed there was more than reckless speculation that drove tech stocks.

up to a stunning 22% weighting in the S&P 500. Self-reinforcing network effects from global tech platforms got an extra boost from even more intense user engagement in a homebound economy.

The underpinnings of the Big Tech strength remain - and likely will unless bond yields surge or an economic acceleration seems underway – but it's unclear if their two-week cooldown was enough to refresh this group for another sustained advance.The recent sideways choppy phase in the S&P 500 has been more frustrating for the bears than the bulls.

In this way, the market continues to act as if big-money investors are not overcommitted to equities, meaning there is no quick-triggered selling that would turn routine pullbacks into self-reinforcing slides. Individually not big market drivers but if we're in a phase where railroad leveraged buyouts, 11-figure tech deals and another round of fiscal juice are in play at once, it's tough to lean too heavily to the bearish side.August begins what is easily been the toughest two-month stretch of the calendar for stocks, with higher volatility and weaker returns, on average.

 

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Lots of hand wringing on this Bloomberg special report. Experts all saying, “we are in a bubble”. They interviewed a lot of managers who missed the rally. They make some interesting points...

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