Thursday, July 6, 2017

It’s Still Not Time To Jump Back Into Popular Tech Stocks

‘Smart money’ isn’t chasing AMD and Nvidia.


By Nigam Arora
MarketWatch
July 6, 2017

I have been getting a flood of requests from investors for an update on smart-money flows in popular technology stocks.

I previously wrote about this on June 15 and June 16.

The highest interest among investors is in Advanced Micro Devices AMD, +8.56% and NVDA, +2.67% Both stocks have recently had several positive news triggers. However, both have pulled back in spite of that. Perhaps this is the reason for the very high interest among investors who we hear from.

The interest level in FAAMG stocks is high but pales in comparison to that for these two. The FAAMG stocks are Facebook, Apple, Amazon, Microsoft and Google parent Alphabet. The popular FAANG acronym includes Netflix but not Microsoft.

Click here to see money flows in these popular technology stocks segmented by important categories, including “smart money” flows, and ranked as provided to The Arora Report subscribers. Our assessments of “smart money” flows are based on proprietary algorithms that dissect every trade and have been refined over decades.

In general, the conclusion is that the “smart money” is not buying this dip but is instead booking some profits.

Actions Speak Louder Than Words

Actions speak louder than words. For this reason, I will simply share with you what we are doing with these stocks. We undertook short-term trades on AMD twice. The first buy was on rumors of a big order from Apple. The trade was exited with handsome profits. The second buy came when AMD had pulled back and news came that it was selected by the Energy Department for its next-generation supercomputer architecture, called the Exascale Computing Project. This trade was exited with very nice profits immediately on news that Nvidia is introducing a new platform for mining cryptocurrencies such as bitcoin. This profit-taking was fortuitous as AMD shares fell after our exit. Both Advanced Micro Devices and Nvidia compete in providing chips used to mine cryptocurrencies.

We have taken profits and exited our longer-term position in Microsoft MSFT, +1.33% .

We are still holding a long-term Apple AAPL, +0.41% position but our average buy price is $18.71. We are still holding Facebook FB, +1.29% long term but our average price is $49.92. For those who bought popular technology stocks for a short-term trade, we gave a sell signal on June 7, when these stocks were trading near their highs prior to the pullback.

Our algorithms also calculate buy zones for these stocks. Currently these buy zones are below where these stocks are trading now.

In a nutshell, we have taken some profits in technology positions but continue to hold several long-term positions. We have profitably done some short-term trades. The plan continues to be to initiate or add on dips in our buy zones for longer-term positions and undertake some short-term trades when good set ups appear.


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