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Nasdaq takes a break: tech stocks set to rebound after a small correction

The stocks had a huge outperformance this summer. Google and Snap had huge moves this year. It's ok to take a short pit stop. It's ok to take a breather as some of tech multiples have gone into the stratosphere. But the rally in tech stocks is not over yet, it just needs a pause and don't consider it as a change of the trajectory where the tech is going this quarter.

As investors are looking for a better entry point, the playbook says: buy more as you have incredible returns waiting, provided you don't have the direct exposure to China.

Since October of the last year there've been not so many dips to buy. There's still lots of uncertainty in the market from the fiscal cliff to Delta. The main challenge to the market remains how all the risk was priced.

Remember, the higher you are, the harder you fall. Nasdaq behaves like in 1999 on elevated multiples and stretched valuations. The tech market is extremely overvalued.

We are in the correction phase, but it's not the end of the world.

But this time, the stock markets are trading quite heavy on volume and cautious starting to worry about the trillion balance sheet of the Fed. There are concerns that the Fed won't be as friendly to the market as in the past as the economy is slowing down as the debt bubble is bursting again on the property side, but this time in China.

This pullback can get expensive. Most probably we will break much lower in the coming days on the technical picture of the defensive rotation.

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