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Hot Sector – When to (really) buy back Technology stocks?

Fri 4 Jan 2019

It’s sounds like déjà vu all over again especially for high-flying technology stocks. U.S. stocks fell sharply on Thursday following a dire quarterly warning from Apple. The iPhone maker blamed a slowing Chinese economy for the shortfall, intensifying fears that the global economy may be slowing down because of the ongoing trade war.

A weaker-than-expected reading on U.S. manufacturing then added to those fears.

The Dow Jones Industrial Average dropped 660.02 points, or 2.8 percent, to 22,686.22 as Apple shares led the decline. The 30-stock index tumbled to its low of the day right before the close, trading down as much as 707.83 points.

The S&P 500 meanwhile pulled back 2.47 percent to 2,447.89 as the tech sector fell 5.07 percent. The Nasdaq Composite tumbled 3 percent to 6,463.50, snapping a five-day winning streak, as Apple’s stock dropped nearly 10 percent.

The drop marked Apple’s worst session since 2013. It was reported that Apple said it sees first-quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet.

Semiconductor stocks in the US such as Advanced Micro Devices, Nvidia, Skyworks and Qorvo all dropped on the Apple warning. Apple’s warning also dragged down other companies that do big business in China.

 

Locally, Inari Amertron Bhd, along with other technology stocks, took a nosedive of 13.61% due to the profit warning from Apple Inc, which is one of the company’s clients.

Meanwhile, Globetronics Technology Bhd also took a beating, declining 13.95% to RM1.48. The Technology index on Bursa Malaysia was one of the worst performers yesterday.

Performance and trend of local Technology and Semiconductor stocks

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Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

These counters have already lost close to 40% last year and the rout is continuing in the new year. However, one man’s meat is another’s poison and vice-versa.

Technology is likely to lead the market rebound later and the key consideration is to determine the level and time to buy into cheap stocks in the sector.

When exactly and at what level would that be? Getting in at the wrong time in a bear market would be very painful but getting in at the right time would be very rewarding. Is the selldown near complete or just right in the middle?

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Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

Which technology stocks are showing the most promising signs of an impending rebound? Not all will rebound nor with the same ferocity and its crucial the right selection is made in a possible rally later.  

Follow their likely analysis and answers with us at mPower Algorithm and mPower Trading and learn when and where you should buy back into the sector’s stocks. It’s a no brainer using algorithm and big data analytics.