Deutsche Bank: The performance of large tech stocks relative to the S&P 500 index has fallen to the bottom of a ten-year channel

Deutsche Bank strategists, including Parag Thatte, wrote in a research report that on Thursday, the performance of mega-cap stocks and technology stocks relative to the other components of the S&P 500 index rebounded from the bottom of a decade-long trend channel and continued its upward momentum on Friday. The strategists noted that in the past, against a backdrop of sustained earnings growth, this group typically experiences a rally after reaching the bottom of the channel. The report pointed out that this year's performance "is entirely dependent on changes in valuation multiples rather than adjustments in earnings expectations, which sharply contrasts with last year’s situation that was entirely driven by upward revisions in earnings expectations."