Blue Line joins the bullish US stock camp: the technology sector falls out of the "gold pit", and software stocks have the most potential for excess returns.

Bill Baruch, the head of investment business at the asset management giant Blue Line Capital, believes that after the recent market turmoil, there are huge opportunities in the US software industry. He believes that companies like ServiceNow (NOW.US), Oracle Corporation (ORCL.US), and Microsoft Corporation (MSFT.US), which have been hit hard under the narrative of "AI disruption of everything" since February, are attractive investment targets at their current prices. Baruch expressed a bullish outlook on the US stock market in an interview, specifically mentioning the tech stocks that were unfairly punished in the recent selloff. Baruch stated that Federal Reserve Chairman Powell's statement that the central bank will not raise interest rates due to the oil shock led to a drastic change in market sentiment. He pointed out that when the VIX index tested near, "pessimism peaked", but afterwards, the market "pulse" became more positive. From a technical perspective, Baruch sees the 6600 level on the S&P 500 index as a key support area. He believes that if the index can hold this level, it is likely to test up to 6800 points, approaching the 200-day moving average. The strategist believes that if oil prices fall by $10, the S&P 500 index could rise by 300 points with just "one piece of good news." Baruch noted that there is a "differentiation" in the market, with software stocks, despite their intrinsic value, being "crushed." "There are some very good companies in the software sector that have been hit hard," he said, pointing out that as the market begins to rebound, he is watching for new leaders. His top picks in the software sector include ServiceNow, Oracle Corporation, and Microsoft Corporation, as he believes that their current stock prices are "extremely valuable." Blue Line Capital believes that these areas have the potential to achieve excess returns. Prior to the recent market changes, Blue Line Capital recently used half of its 8% cash reserve to buy software stocks. Baruch explained that in the typical political situation like GEO Group Inc, he prefers to hold cash to seek acquisition opportunities, but the undervalued software was too tempting to ignore. If oil prices fall and positive news emerges, he believes "April and May could be very interesting," and this momentum could continue into June. Previously, senior strategist Ed Yardeni also stated that US tech stocks have returned to levels that are attractive to investors willing to make long-term investments after falling from last year's historical highs. Meanwhile, Wells Fargo & Company also believes that technology stocks are at attractive valuations for investors. Wells Fargo & Company's investment research institute has upgraded the sector's rating from "neutral" to "bullish" due to its underperformance compared to the S&P 500 index and the strong growth prospects supported by the widespread application of artificial intelligence. The company's global investment strategy team stated that despite concerns about valuation, capital expenditure, and the disruptive impact of artificial intelligence, the fundamentals of the information technology industry remain strong. They cited double-digit profit growth in the fourth quarter as an example. The strategists also noted that since the outbreak of the US-Iran war, the information technology sector has outperformed the S&P 500 index, highlighting the industry's long-term quality characteristics.