Not even a bad earnings report from Tech bellwether Cisco Systems can keep Tech stocks down these days. Yesterday, Cisco was getting pummeled in pre-market trading, down around 10% on heavy volume. We naturally expected our positions in a Networking ETF to fall in sympathy, since CSCO is the third largest holding inside the fund. Much to our surprise, however, the other top names in the fund had big rallies, and while Cisco ultimately closed down by a whopping 14% for the day, the Networking ETF rose by about 0.8%. That’s a nice return on a more normal day, much less on a day when a top holding is getting walloped. That the sector was able to shake off bad news like that was impressive to say the least.
Pinnacle has carried an overweight in Tech in almost all portfolios since approximately last summer, and we continue to view it as a very attractive sector based on a number of different factors, and given our fairly positive cyclical outlook for the economy and stock market.
Chart: iShares Networking ETF (black line) vs. CSCO stock (brown line)
