[Editor’s note: “The Next Great Tech Bull Market Has Begun” was previously published in September 2022. It has since been updated to include the most relevant information available.]
The tech sector dropped like a stone this year. So, it’s easy to forget the cardinal rule that marks many a bull market: Tech still rules the world.
Here’s a little news flash. Tech stocks have entered a brand-new bull market that could be the start of a massive 50%-plus melt-up. And certain tech plays could see a 10X surge higher!
The reason behind this is deceptively simple.
Tech stocks have been getting slammed all year long. The sector gave back roughly 30%, while many individual names plunged 70% or more.
That selloff had nothing to do with fundamentals. Everywhere, folks are still using technology to do everything. They’re still all shopping on Amazon (AMZN). They’re still watching Netflix (NFLX), buying Apple (AAPL) products, and working with Microsoft (MSFT) software.
Tech stocks were crushed because of this little thing called inflation. Indeed, that became a big problem in 2022 – for the first time in 50 years.
But that big problem is starting to fade. For months, the Fed has been hiking rates aggressively to combat it. And now there are murmurs of a pivot in the near future.
Plus, we’re seeing indicators flashing all across the market, signaling that the bottoming process has begun. All fundamental, technical, and sentimental evidence points to this new bull market being the real deal.
If that’s true, the data says tech stocks will rip higher by 50% over the next 12 months. In fact, dozens of select tech stocks should rally by 1,000% or more.
And we’ve found one tech stock we think can rally 10X before the year’s end…
In other words, investors who buy the top tech stocks today will make fortunes over the next 12 months.
Let’s make sure you’re one of them.
Indicators Signal the Formation of a New Bull Market
The first signal flashing brightly – valuations. Without a deep recession, bear markets tend to bottom around 14 to 16X forward earnings. And recently, stocks have reached about 15X – very close to that bottoming level.
The second thing we’re watching is financial conditions. Bloomberg’s financial conditions index – which takes yields, stock prices, commodity prices, etc., into account – dropped below -1 a few weeks ago. Over the past 25 years, when that index falls beneath -1, stocks are close to a bottom.
The third? The S&P’s price is well below analysts’ price targets, about 23% below consensus. Historically, the market bottom when the S&P was 20% to 30% below analyst targets. That’s bullish.
Another indicator – fund managers have record-high levels of cash. That indicates capitulation and money waiting on the sidelines for a more bullish setup. And that’s bullish, too.
Not to mention, investor sentiment is at peak-bearish levels. This tends to mark “peak fear,” and it usually correlates with market bottoms.
What about a strong technical indicator? The McClellan Oscillator, which measures market breadth, just broke below -15 – a super negative reading it rarely falls beneath. And every time it does – truly 100% of the time – stocks are higher 12 months later. Indeed, that is a huge bottoming signal for the market.
These aren’t the only signals. The list goes on. It’s clear that we’re due for a big rally here. And it’s possible that this rally could bounce us all the way out of bear market territory.
Bull Market Fortunes Are on the Way
In truth, we’ve been bullish on a new tech bull market for the past two months. Why?
The mega summer rally we saw this year was significant. July’s inflation print was so good that tech stocks soared about 3%. That continued what had been a big rally ever since mid-June. By definition, that means tech stocks officially entered a new bull market.
Sure, that’s just a definition. But it’s also very meaningful.
This technical indicator has successfully predicted every tech-stock bear market’s end over the past 50 years, except the dot-com crash. And this isn’t the dot-com crash, since valuations at that time were about 50% higher than they are today.
To that end, every time over the past 50 years (excluding 2000-01) that tech stocks did rally 20% off recent lows as they did this summer, they soared over the next 12 months.
The average 12-month-forward gain? Almost 40%. The average 12-month gain in the most recent examples from the past 20 years? Nearly 50%!
In other words, tech stocks flashed an ultra-rare “bull market entry” signal back in July. And it has a 100% track record (excluding the dot-com crash) of predicting big tech-stock gains over the next year.
The investment implication? The odds are very high that tech stocks surge about 50% over the next 12 months.
If they do, then history also says potentially dozens of small-cap tech firms will soar more than 10X as well.
And one stock in particular has the potential to bag 10X gains over the next month alone…
The Final Word
Lots of investors think money is made in bull markets.
That’s true. Money is made in bull markets. But fortunes are made in bear-to-bull-market transitions.
In those periods, investors have the opportunity to score a decade’s worth of returns in a single year. They have the opportunity to see their investments soar 5X, 6X, even 10X in value in 12 months or less.
It’s a once-in-a-decade investment opportunity. It’s happening right now. And all investors have to do to capitalize on it is buy the right tech stocks today.
We’ve spent the past several months scanning the market for the highest-upside-potential tech stocks in this bear-to-bull market transition.
Ultimately, our research led to us to one stock being the single best buy in the market right now.
What makes this stock so special?
Well, it’s smack dab in the middle of the most promising economic opportunity of our lifetimes. I’m talking about capitalizing on the Space Economy. The opportunities that lie within are about as infinite as space itself. And the stock I’m focused on is the only one that can realistically soar 10X in a hurry.
Seriously. If proven successful, this company is primed to change the world. And its stock could really rise by 10X or more in that time.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.