This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Global Macro: Strong Tech Stocks a Bullish Sign

NEW YORK (TheStreet) --Renewed leadership of PowerShares QQQ (QQQ) over SPDR S&P 500 (SPY) the past few weeks indicates strength in U.S. equities overall.

High-beta companies found on the Nasdaq tend to lead the market higher when sentiment is elevated. The strength of tech stocks is a bullish sign that investors believe in the economy.

Last year, the prevailing thought was that stimulus cuts by the Federal Reserve would push equities lower. Instead, U.S. equities rallied in December when the Fed began to reduce its monthly bond purchases as investors took the the central bank's move as a sign that policymakers were confident in the direction of the U.S. economy.

But then anxiety over emerging markets because of the prospects of higher U.S. interest rates and slowing growth in China led to broad selling across global assets.

There was widespread fear that economies in countries such as Turkey and India would crumble and their currencies would be devalued, but quick action from foreign central banks helped fend off the attacks.

This week, a solid bottom has formed under global equity markets, as Chinese data outperformed expectations, and Janet Yellen, the new Fed chair, calmed the market by saying she wouldn't change U.S. monetary policy.

China's trade balance came in well above estimates on Tuesday night, indicating that output was still strong in China's manufacturing and services sectors. That led to a bid higher in emerging-market assets, as a majority of revenue generated by developing countries comes from Chinese demand.

Meanwhile, Yellen spoke in front of the U.S. House of Representatives on Tuesday afternoon and reassured that she was sticking to the Fed's current path of ending the stimulus.

The string of positive news should give investors even more reason to allocate funds toward riskier assets, such as tech stocks. If sentiment remains elevated, expect the rally in U.S. equities to continue and the market to reach record highs over the next few months.

QQQ ChartQQQ data by YCharts

At the time of publication, the author had no position in any of the funds mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. He takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.

Follow @Macroinsights

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs