writes
Traders are betting a recovery in technology stocks will fizzle on concern global economic growth fails to justify valuations.
While the Nasdaq 100 Index climbed 2.8 percent in two days, after reaching a four-month low, the rebound followed six weeks in which investors pulled $8.26 billion from an exchange-traded fund tracking companies from Google Inc. to EBay Inc. Bearish options on the ETF cost the most in more than two years relative to bullish bets, data compiled by Bloomberg show.
Nasdaq 100 stocks traded at the highest prices relative to earnings since March 2010 last month. That, plus concern that a stronger dollar will lower revenue for U.S. companies, makes technology shares more vulnerable to a selloff, according to Notz, Stucki & Cie.?s Pierre Mouton, who is reducing holdings of Microsoft Corp. and Intel Corp.
?For many software, cloud and social-network companies, valuations had become too rich,? said Mouton, who helps oversee $8 billion as a portfolio manager in Geneva. ?Many weak hands must have bought these companies quite late in the rally and have now reached their loss-resistance point.?
Technology stocks dropped last week as Google reported third-quarter profit and revenue that missed estimates, while online marketplace EBay forecast fourth-quarter sales that fell short of analysts? predictions. Netflix Inc. tumbled 21 percent as it reported slower subscriber growth, while facing the new challenge of HBO?s plan to offer online streaming.
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