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TIME TO HEDGE?

Momentum in the tech sector, and therefore the broader market, might be starting to wane after a breathtaking rally.

Wherever you look, tech hardware and semiconductor stocks have soared, although that has paused in the last couple of days after Broadcom's AVGO.O results underwhelmed investors.

The Nasdaq 100 .NDX is still up over 20% this year, but that pales compared to South Korea's Kospi .KS11, which has almost doubled.

The MSCI World Semis index .MIWO0SE00PUS is up about 50% in the last two months alone, but Barclays notes that momentum is shaky.

"Fatigue is visible and support from fast money/CTA positioning, an important driver of the rally since March lows, may be losing steam given elevated levels now," Barclays equity strategists write.

"Meanwhile, a pickup in equity supply from large IPOs and capital raises in the tech space will suck in liquidity."

The calendar is getting busier too. The ECB is set to hike next week, while new Fed chief Kevin Warsh will chair his first meeting the week after. The BOJ also looks likely to hike this month.

And that's before we've even mentioned the ongoing peace talks between the U.S. and Iran that have been stalled for weeks, keeping traffic through the Strait of Hormuz almost at a standstill.

"Overall, the combination of frothy technicals and a catalyst-heavy June suggests that the chances of a tactical pullback, especially in the narrow momentum space, cannot be dismissed, in our view," Barclays says.

"With both equity and bond volatility near the lows currently, it feels wise for investors to have hedges in place, given summer seasonality often proved to be tricky."

(Samuel Indyk)

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EARLIER ON LIVE MARKETS:

TECH DRAGS ON STOXX BEFORE U.S. PAYROLLS CLICK HERE

EUROPE BEFORE THE BELL: MUTED START CLICK HERE

SMALL MISS, BIG HIT CLICK HERE