The tech trade pulls back from record highs: How investors should move
Summary
The panel discusses the tech sector pullback from record highs, attributing it to crowded trades, higher CPI, and overextended momentum. Joe warns that the momentum factor may continue to decline, while Jim Cramer takes half off Qualcomm due to parabolic action. Josh advises patience and proper position sizing.
- Tech sector retreats from record highs amid hotter CPI.
- Josh highlights crowded trades and advises prudent position sizing.
- Joe warns momentum factor (MTUM) is vulnerable to further pullback.
- Jim Cramer reduces Qualcomm position, citing pulled-forward gains.
- Jim also flags geopolitical risks from Strait of Hormuz closure.
- Panelists emphasize patience rather than adding to positions near highs.
Trade Ideas
Momentum factor likely to pull back further.
The momentum factor (MTUM) is overextended with positioning at the 100th percentile, past earnings catalysts are exhausted, and the rate environment is turning less favorable as yields rise. This sets up for continued pullback over the next several days. Investors should be patient and not add to positions.
Future gains pulled forward, reducing position.
Qualcomm's share price has gone parabolic as future gains into 2027 are being pulled forward. Recent earnings were weak with lowered guidance, yet the market seized on an already-known data center client as a reason to buy. Jim is taking half off to manage risk while still maintaining his core investment thesis on handset recovery and diversification into automotive and data centers.
