The selling pressure that started in foreign bourses, hit commodities and currencies, and pummeled U.S. small-cap stocks has finally — like a Japanese tsunami — washed over the large-cap favorites that regular Americans pay attention to this week. It hasn’t been all at once, mind you, but rather an incremental flood that has systematically taken down well-known favorites by sector one by one
Energy stocks were among the first victims, as Dow Jones Industrial Average components Exxon Mobil (XOM) and Chevron (CVX) were hit hard and dropped to levels not seen since early in the year. Materials and industrials were next, with stocks like United Technologies (UTX) and Caterpillar (CAT) suffering.
One of the last bastions of strength has been big-momentum tech stocks. You know, the frothy stuff that people pile into because other people are piling into it. The same stuff that’s been enjoying perfect 45-degree uptrends since the little tech-sector bump back in March and April.
Well, as the market-side selling pressure deepens — despite Friday’s rebound — and measures of internal market strength erode further (NYSE new highs vs. new lows has dropped to late 2011 levels, for instance) these tech stocks are in trouble. Here are five popular names to sell.
Tech Stocks to Sell — Facebook (FB)
Facebook (FB) hasn’t closed below its 50-day moving average since May as the stock has launcher higher on enthusiasm over its efforts to build different client experiences for different demographics, such as the Paper app.
But momentum is waning as the uptrend gets long in the tooth and doubts grow over the company’s plans to integrate health data into user profiles and its VR-headset ambitions following its Oculus Rift acquisition. I’ve recommended the October $75 puts to Edge Pro subscribers.
Tech Stocks to Sell — BlackBerry (BBRY)
After suffering a near-death experience late last year, BlackBerry (BBRY) has clawed its way back among other tech stocks by focusing on its messaging software suite. BBRY is also trying to reinvigorate excitement with the launch the new Passport handset with a physical keyboard and unique design.
But the Passport hasn’t been the gateway to higher prices, with shares of BBRY stock rolling over in disappointment. Watch for a break of support from the August low, which would put the April-June level back in play for a 26%-plus decline from current levels for BBRY stock.
Tech Stocks to Sell — Intel (INTC)
Intel (INTC) enjoyed a massive surge this summer on optimism over the “internet of things” as well as the company’s efforts to become more relevant in the mobile and tablet space. INTC stock was also boosted by hopes over the corporate PC upgrade cycle now that Microsoft (MSFT) stopped supporting the Windows XP OS. But evidence of a slowdown in PC sales and saturation in the tablet market is dimming that brightness.
I’m looking at the very least for a decline to fill the July gap (down 9% from here) with a possible drop to the 200-day moving average, which hasn’t been hit since February, to fill the June gap (down 16%). I’ve recommended the October $35 puts to Edge Pro subscribers, which are carrying a gain of nearly 62% since late September.
Tech Stocks to Sell — Apple (AAPL)
Shares of Apple (AAPL) are tightening up after initial excitement over the iPhone 6/6 Plus and Apple Watch gave way to dissatisfaction amid the iOS 8 rollout trouble and “bend gate” problems. Not even tech stocks as vaunted as Apple are safe from the selling pressure.
I’m looking for a downside break as investors realize that there aren’t any big positive catalysts on the horizon beyond a minimal refresh of the notebook and iPad lineups on deck. I’ve recommended the October $100 puts to my Edge Pro subscribers.
Tech Stocks to Sell — Google (GOOG)
Shares of GOOG stock have been underperforming its peers since peaking in March, never fully retracing its selloff into the May lows as the issuance of the new Class C shares has diluted investor interest.
A lack of catalysts highlights the fact that no news is bad news for momentum tech stocks like GOOG that rely on excitement and buzz to get moving. A downside break of the 200-day moving average, on which shares currently rest, would be the first since the summer of 2012.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm.
