Thursday, March 13, 2008

Tech watch

With the indices struggling to break through their 20-day MAs, let alone the 50-day MAs, there are signs of a recovery in some leading Tech stocks.


Sample list: GOOG, AAPL, CSCO, BIDU, MSFT, INTC, ORCL, AMAT, TXN, HPQ

Stocks above 20-day MA (80%): Apple (AAPL), Cisco (CSCO), Baidu (BIDU), Microsoft (MSFT), Intel (INTC), Oracle (ORCL), Applied Material (AMAT), Hewlett Packard (HPQ)

Stocks above 50-day MA (40%): Cisco (CSCO), Intel (INTC), Applied Materials (AMAT), Hewlett-Packard (HPQ)

Stocks with a 20-day MA > 50-day MA (20%): Applied Materials (AMAT), Hewlett-Packard (HPQ)

Not the worst spread of strength for a weak market. Of the two intermediate bull trenders (AMAT and HPQ), Applied Materials (AMAT) has the best outlook going forward. Hewlett-Packard is struggling to hold its 200-day MA/40-week MA after 3 years of strength, so I would can this as a long side play (or maybe consider a January $70 2010 put going for $23.60 from the ask). For Applied Materials there is a January $10 2010 call going for $11.70 from the ask - that's less than a $1 time premium for just under 2 years. If the stock made it to its point-n-figure chart target of $30.50 it could net almost a 100% return.

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