Navigating the Tech Sector in the Second Half of 2024: Insights from Direxion Managing Director Ed Egilinsky

The tech sector has been on a roll in 2024, with major companies like Apple, Microsoft, and Nvidia leading the charge. However, questions linger about whether this momentum can continue through the second half of the year.

According to Direxion Managing Director Ed Egilinsky, the key factors to watch are valuation, earnings, and the evolving tech landscape. With valuations in the technology sector at a premium, the sustainability of growth remains to be seen. The upcoming tech earnings season will give insights into whether AI technology continues to drive the sector.

Investor sentiment towards tech-focused leveraged ETFs is mixed, with outflows in bullish ETFs like Direxion Technology Bull 3X Shares, but inflows in bearish ETFs like Direxion Technology Bear 3X Shares. Single stock leveraged ETFs tied to tech giants are also attracting attention.

For diversification, Egilinsky recommends considering the Direxion Equal Weight NASDAQ 100 ETF, providing a more evenly distributed exposure to tech stocks. Among the “Magnificent Seven” tech companies, Google/Alphabet and Meta Platforms are singled out as relatively reasonably valued, despite not being cheap.

As the U.S. election approaches, Egilinsky anticipates increased volatility in the tech sector. Cybersecurity companies are also on his radar, as they have lagged behind but could see increased attention leading up to the election.

In the second half of 2024, investors will need to stay nimble and leverage tools like those offered by Direxion to navigate the dynamic tech market. With earnings, valuations, and emerging threats shaping the sector’s trajectory, both bullish and bearish investors will need to be strategic in their approach.