Jul 03, 2023

China’s manufacturing sector could fuel a bounce in the stock market this week.

NAS100: Daily Chart

NAS100: Daily Chart

The NAS 100 is testing a resistance level from early 2022, and a breakout here could target the all-time highs at 16,771.

The Nasdaq 100 technology sector index gained close to 32% in the first half of the year, almost breaking its first-half record set in 1983. The tech sector was propelled by an investor buzz over AI technology. Apple reached a new landmark on Friday as the first publicly traded company to hit a $3 trillion valuation.

The technology giant now has 2 billion active devices and, despite a slowdown in total revenue over the last few quarters, still has momentum in its iPhone business, which makes up 50% of all revenue. Apple shares outperformed the Nasdaq during the first half of the year with a 45% return.

Citigroup, which started coverage of Apple this week, said the stock has another 30% of upside available. The company is “navigating the macro slowdown and inflationary pressure on consumer spending by consistently gaining share from Android phones,” according to Atif Malik. The analyst has now set a $240 price target on Apple shares, the highest target among Wall Street analysts.

Entertainment stocks have rebounded from a previous slump in the fourth quarter, but they remain under pressure. Disney finished the first half with a near-zero gain. Warner Bros., Discovery, Fox Corp., and Comcast saw returns of 10% to 30% apiece. Shares in Paramount Global fell 14% in the first half as analysts questioned the financial position of the firm.

The current sentiment of tech investors gives traders an opportunity to mount a breakout at the current level and target all-time highs.

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