5 Teetering Tech Stocks You MUST Watch

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With all of the volatility that has crept into the market during the past few weeks, investors have been searching for stocks that they believe will add some safety and stability to their portfolio. They’re looking for value stocks with strong dividends and low P/E ratios.

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In other words, they’re looking for the exact opposite of what tech stocks have to offer.

Tech stocks are typically considered to be growth stocks that thrive when the market is strong and bullish sentiment is running rampant on Wall Street — but get their hats handed to them when that enthusiasm evaporates.

Luckily for us, as options traders, we can take advantage of the bearish downturns just as easily as we can profit from the bullish upswings. The key is knowing when to jump in.

To give you a sense of the bearish opportunities we’re seeing, we’ve got a list of five tech stocks that have caught our attention.

Teetering Tech Stocks: Apple (AAPL)

tech-stocks-aaplApple Inc (AAPL) used to be one of the darlings of Wall Street. With its revolutionary iPhone, the company was a juggernaut that couldn’t be stopped. At least not then.

Now, AAPL faces stiff competition from other smartphone producers, and the company’s products have reached a level of saturation in the United States and elsewhere around the world that makes it difficult for the company to maintain strong sales growth. Sure, people are still buying millions of iPhones … but the growth rate has slowed down. And for a growth stock, that’s a death sentence.

During the past year, AAPL has formed a solid head-and-shoulders bearish reversal pattern and is on its way lower. It’s found some temporary support at $92, but based on the height of the head-and-shoulders pattern, our longer-term price projection is down at $78 — which also lines up nicely with resistance the stock faced in March 2014.

Everyone’s got their own opinion on Apple. But, with any stock, investors are often left with more questions than answers. Join us at our SlingShot Trader webinar on Wednesday, and we’ll trade the news together

Teetering Tech Stocks: Tesla Motors (TSLA)

tech-stocks-tslaTesla Motors Inc (TSLA), another former darling of Wall Street — after all, who doesn’t like the sex appeal of a sleek electric automobile — had been fluctuating in a wide $100 range for the past two years.

It seemed to be caught in a pattern. In one quarter, the company would surprise with stellar sales number and the stock would soar higher, only to be followed by a lackluster quarter with disappointing sales numbers and a falling stock price.

Falling oil prices have certainly removed a lot of the pressure consumers have been feeling to make the shift from gasoline-powered cars and trucks to electric vehicles — especially the expensive models TSLA offers. Plus, TSLA’s competitors have been introducing successful, lower-priced electric and hybrid vehicles of their own, which have certainly taken a chunk out of the company’s market share.

During the past week, TSLA finally broke through its multi-year support level around $180, and we anticipate the stock is going to continue falling toward longer-term support at roughly $120, the low established in November 2013.

Within that kind of long-term downtrend, though, there’s lots of short-term money to be made. That’s what we do every day at SlingShot Trader: turn headlines into quick option profits.

Teetering Tech Stocks: Qualcomm (QCOM)

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While some tech stocks are just starting to lose their mojo and turn lower, Qualcomm, Inc. (QCOM) lost its mojo long ago and is continuing its decline. In fact, the rate of QCOM’s decline is actually accelerating.

The telecom and networking sector is a tough place to do business right now. Competition is fierce, with companies like Intel (INTC), Nvidia (NVDA) and Avago Technologies (AVGO) battling for market share.

Adding to the stress these companies are feeling is the fact that the Chinese economy is slowing down at an alarming rate. Just a few years ago, tech companies could be confident demand was going to be increasing as the Chinese government led a robust recovery full of tech-infrastructure investment, but now tech companies are now fighting over fewer and fewer new contracts.

QCOM’s accelerated decline kicked off in early November 2015, when management released its fiscal Q4 earnings and downgraded its earnings-per-share (EPS) guidance. Wall Street had been expecting earnings in fiscal Q1 of $1.08 per share, but management guided lower to a range of 80 cents to 90 cents.

Since the stock has broken through its most recent support levels, we have to go all the way back to August 2010 to find historical support at $37.50 to establish our price target. As 2016 wears on, bears should have no shortage of chances to exploit broken charts like these for bearish profits.

Teetering Tech Stocks: Nokia (NOK)

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For Nokia Corporation (NOK), the long-term decline has been closely tied to the long-term ascendency of Apple. The more and more people bought smartphones like the iPhone, the less and less they bought NOK’s non-smartphones.

In 2007, NOK had climbed up to $42. But after the financial crisis, and with AAPL gobbling up market share, NOK has never been able to recover. It bounced higher in 2013, when it announced it would be selling its devices and services divisions to Microsoft Corporation (MSFT) for $7.2 billion and focusing on its mobile broadband technology instead. Unfortunately, NOK has failed to flourish, even without the albatross of its outdated handsets hanging around its neck.

NOK took a big hit this past week when the company disclosed that the royalty payments from Samsung for technology NOK holds the patents to are going to be lower than expected. This news forced NOK to lower its guidance for its recurring revenue from 900 million euros for 2016 to 800 million euros.

This puts the stock on the verge of completing a bearish head-and-shoulders reversal pattern. We expect NOK to break through support at $6 and make its way down toward support at $5.

But it’s not just NOK. These kinds of reversals happen every day — and make big money for opportunistic option traders. Next up is one such stock we’ve traded many times.

Teetering Tech Stocks: Yahoo! (YHOO)

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Not to be outdone by the bearish head-and-shoulders reversal patterns on Apple and Nokia, Yahoo! Inc. (YHOO) is about to complete a multi-year formation of its own.

In the go-go years from 2013 to 2015, YHOO had hitched its wagon to the Chinese juggernaut Alibaba Group Holding Ltd (BABA), and it was loving life. YHOO owns 384 million shares of BABA, which is approximately 15% of the company. So, as BABA’s valuation kept getting higher and higher in the run up to the company’s September 2014, YHOO’s share price moved up as well.

Sadly for Yahoo, BABA hit its peak in late-2014 and has been falling ever since, pulling YHOO down with it. Just as sad is the fact that Yahoo stock isn’t worth much without its Alibaba holdings. Currently, BABA is trading around $63.50, which means that Yahoo’s holdings are worth about $24.4 billion. Today, YHOO itself has a market cap of $27.5 billion. Apparently, investors don’t believe that Yahoo is worth much as a company if such a small chunk ($27.5 billion – $24.4 billion = $3.1 billion) of the company’s market cap isn’t based on the value of the company’s BABA holdings.

We expect YHOO to break down through support at ~$27 and eventually make its way down toward $20.

These tech giants may get all the attention — especially when they stumble — but equally great trades are setting up every day, across the board. Give SlingShot Trader a try — just $39 for your first 2 months — and we’ll show you how to profit from extreme moves in ANY market.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.


Article printed from InvestorPlace Media, https://investorplace.com/2016/02/teetering-tech-stocks-yhoo/.

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