Company Interview / Is local tech set for a further correction?

Key points:

Silver exhibits abnormal volatility, with recent corrections seen as healthy market actionSilver miners display resilience and may be poised for outperformanceAustralian tech stocks face imminent correction due to structural weaknesses and yield pressuresEnergy sector considered primed for a long-term uptrend after prolonged stagnation

David Bird from Mastering The Market shares perspectives on key shifts across commodities, tech, and energy sectors, focusing initially on the extraordinary volatility in silver prices. Bird notes that silver surged from $30 to $120 in just six or seven months, an abnormal move that was followed by a healthy correction. He observes that despite silver’s 50% drop, silver miners – represented by indices such as SIL and Silver Juniors – fell only 25-30%, reflecting a typical leveraged response to the underlying asset. Bird points out that after such corrections, upside potential often rotates into the miners themselves, with historical trends suggesting miners could outperform silver in the next phase.

Zooming in on technology stocks, Bird highlights that Australia's tech index, with just 3-4% weighting, differs substantially from the US market. He recalls that local tech indices began declining ahead of global benchmarks like Nasdaq, suggesting that momentum divergence is likely to continue. Bird’s analysis indicates that Aussie tech stocks, including stalwarts such as Wisetech (ASX:WTC), could face further corrections, especially under the pressure of rising yields and changes in market sentiment.

In the energy sector, Bird comments on long-term upside potential, noting that energy has been in a bear market since 2008. He identifies 9,400 and 12,000 as key levels for the energy index, suggesting a breakout above these could trigger significant market participation, mirroring past moves in commodities.