Tech stocks are having their best January in decades — Here's why that may not be a good sign

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Technology stocks are on quite a tear to start 2023, but that could actually be an ominous signal.

The Nasdaq Composite Index COMP is up 11% so far this month, on track for its best January performance since it notched a 12.2% gain in 2001, according to Dow Jones Market Data. But that 2001 rally went on to cool in a big way: The Nasdaq plunged 29.7% through the rest of the year.The Nasdaq Composite Index COMP is up 11% so far this month, on track for its best January performance since it notched a 12.2% gain in 2001, according to Dow Jones Market Data.

The setup feels similar this year, as tech stocks plunged in 2022 from record peaks experienced during a wave of optimism about the trajectory of young public tech companies. The Nasdaq had its fourth worst year on record, and worst since 2008. The Nasdaq is seeing its best monthly performance since July 2022, according to Dow Jones Market Data, and it’s also on track to log its seventh best January gain on record.

 

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