Stocks were back on the slide Thursday as investors came to their senses following a post-Federal Reserve rally on Wednesday afternoon sparked by the announcement of the first interest rate hike in nearly a decade.
The start of the first monetary policy tightening campaign in 11 years isn’t going to be benign — not with the impact it will have on currencies (dollar stronger), commodities (weaker) and corporate profits (hit by both the dollar and lower commodity prices).
Technical measures of market health are also flashing red, with breadth narrowing, small-caps weak and volume in advancing issues unimpressive.
As a result, the opportunities seem to be on the short side — led by a group of big-cap tech stocks that are vulnerable to further declines from here.
Here are four tech stocks to watch out for.
Tech Stocks in Trouble: Apple Inc. (AAPL)
Apple (AAPL) stock is under new pressure — falling out of a five-month consolidation range — as iPhone demand and China sales worries fester.
Channel checks of iPhone parts suppliers have reinforced these fears in recent weeks while the response to new products like the Apple Watch and the iPad Pro have been far from overwhelming. The bulls are hanging onto ideas like an increase in average selling prices and the possible refresh of the 4-inch iPhone next year.
The company will next report earnings in late January. Analysts are looking for earnings of $3.25 per share on revenues of $77 billion.
I have recommended the Jan $110 puts to Edge Pro subscribers.
Tech Stocks in Trouble: Oracle Corporation (ORCL)
Oracle (ORCL) stock dropped hard on Thursday after reporting mixed fiscal Q2 results.
ORCL saw a 6.4% drop in revenues and a slight earnings beat, but disappointed slightly on forward guidance. Analysts cited revenue headwinds caused by the dollar’s strengthening. The company’s transition to cloud services remains slow and painful.
Oracle is expected to report its next batch of results sometime in mid-March.
Tech Stocks in Trouble: Cisco Systems, Inc. (CSCO)
Cisco (CSCO) stock hasn’t been going anywhere since October after releasing disappointing guidance back in November that overshadowed a small earnings beat. Specifically, the company highlighted uneven global economic growth and weak capital expenditure spending outside of the United States.
CSCO is scheduled to next report earnings on Feb. 9. Analysts are looking for earnings of 54 cents per share on revenues of $11.8 billion.
Tech Stocks in Trouble: Qualcomm, Inc. (QCOM)
Qualcomm (QCOM) shares have been in a persistent and accelerating downtrend going all the way back to summer 2014 as the smartphone market matures and saturates and the company’s wireless technology royalty revenue stream comes under threat both here at home and in Asia.
More recently, Qualcomm decided after an internal review not to split its chip and licensing businesses.
QCOM will next release results on Jan. 27. The company is expected to report earnings of 90 cents per share on revenues of $5.7 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
