One of the worst performing sectors after the election was the large technology group. While the Dow Jones Industrial Average rallied to close up 5.4% last week, the Technology SPDR (ETF) (NYSEARCA:XLK) lagged behind with a gain of just 1.2%.
Even Wall Street darlings like Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) have lost some of their momentum. But with this recent lag, the biggest tech stocks are now some of the best stocks to buy.
I think the reason for the underperformance of tech stocks has to do with the rotation of money out of the sector (which overall has been solid) into beaten-down sectors such as healthcare. It shouldn’t take long for the longer-term uptrend to resume, at which point the three tech stocks we’re about to cover will continue to be the leaders of the sector.
The following are three of the best tech stocks to buy on this dip.
Big Tech Stocks to Buy: Apple Inc. (AAPL)
AAPL hit a two-month low this week and was down over 10% from the 2016 high set in October.
But as with any solid company that sees a pullback, the dip in Apple shares has created an opportunity for investors who have been looking for the right time to buy in.
AAPL stock pulled back close to its 200-day moving average (the blue line) in September before rallying to its best level of the year.
Then, this week, Apple shares traded within $0.20 of the moving average before attracting buyers again. This level will likely prove to be support once again and it is where you should keep on if you’re looking for a buying opportunity in AAPL stock.
Big Tech Stocks to Buy: Facebook Inc (FB)
Similarly, FB closed below its 200-day moving average for the first time ever on Monday.
Facebook stock has traded below that level in the past, but has always been able to rally back and close above the indicator before the market close.
But while the volume has been unusually high for FB, as it reported earnings during the middle of the S&P 500 losing streak, I continue to like the stock in the long-term and it remains my favorite mega-cap tech play.
That said, the recent breach of the Facebook moving average is troubling. I recommend watching the action over the next few days to see if the stock can find a bottom. If it can, FB immediately becomes a buying opportunity.
Big Tech Stocks to Buy: Microsoft Corporation (MSFT)
Microsoft Corporation (NASDAQ:MSFT) has not joined in the market-wide rally either, but it has held up much better than its mega-cap peers.
MSFT stock breached its 50-day moving average (the red line) a few times over the last week, but it has been able to rally and close above it each day. Now Microsoft stock is just 3.5% from its all-time closing high set last month.
That means any pullbacks in the near-term will be healthy and would open up a buying opportunity for MSFT too.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.