A seeming disconnect between a historic bull run and everywhere else other than Wall Street may have investors believing cash is king. However, a forward-looking market and one made up of stocks continues to show strong signs of life. And in some cases, investors are being offered healthy price charts of leading tech stocks to buy right now. Let me explain.
No doubt stepping to the side, out of harm’s way and fully into cash in a market that appears increasingly disrespectful of today’s health crisis and social justice which will undoubtedly continue to take a toll on Americans and the economy seems prudent. The market has to have gotten ahead of itself, right? And it’s hard to blame that mindset.
The S&P 500 is up nearly 40% since the March 23 bottom. Among the more positive adjectives to describe the price action, it’s amazing, as well as historic. It’s also proven determined enough for the broader average to briefly enter positive territory on the year and make mincemeat of an equally dazzling and brief bear cycle. Covid-what?? Additionally, the tech-heavy NASDAQ Composite is up 12.2% year-to-date at record highs!
That said, what’s going on? Initially the broader market rally needed little help. Conditions for risk assets were, quite simply, grotesquely oversold as they worked their way out of a “the end is near” -type of panic. To be fair, numbing headlines of the novel coronavirus and outlandish market volatility didn’t offer an outright RSVP. Nevertheless, it was a spectacular opportunity within the framework of a zombie and economic apocalypse.
Next came all the money. Tons of it was sent to businesses, consumers and an important injection of support from the Federal Reserve to shore up the financial markets. The rally’s backbone could be as simple as that. There is after a well-known saying on Wall Street that warns investors against fighting the Fed.
Investors are free to throw in a side of bullish algorithms and performance chancing money managers to help account for the record-breaking rally. However, the truth is that price charts led by tech companies prospering in today’s new and socially-distanced normal have also largely supported the bullish environment the entire way without requiring investors to dig deeper into those always questionable “whys.”
So, what’s next? Nobody knows for certain, and today’s healthy market could always end in the blink of an eye. But in a trend which remains friendly, where breakouts continue to work much more often than not, there are three leading technology names whose stocks are saying we’re not done yet for those willing to listen rather than judge:
That said, let’s dive in
Tech Stocks to Buy: Netflix (NFLX)
The first of our tech stocks to buy are shares of Netflix. The streaming giant was technically making all the right moves just prior to late February when the coronavirus pandemic first took hold of U.S. markets. Shares had just broken above mid pivot resistance within a 20-month long “W” corrective base, and looked primed for a continued rally to new all-time-highs. The pattern breakout wasn’t meant to be, but bulls did quickly regroup.
Shares of Netflix moved quickly to be an early favorite of investors. A fast reversal from its corrective low resulted in technical leadership, as well as new all-time-highs out of its newly-flawed — but hard-to-fault — weekly base.
The past month has seen new highs in Netflix. However, a rotation has also resulted in a period of under-performance. It even produced a bearish head and shoulders pattern formed around its former 2018 high. But the dynamics of the questionable price action has quickly changed for the better in this stock to buy.
As of Tuesday’s close, shares have broken above Netflix’s closely-aligned former high and pivot of the bearish right shoulder. Almost without question the latest move in shares have larger bullish implications. For now, I’d recommend simply monitoring Netflix. If shares are still within 5% of 2018’s high and signal a stochastics crossover on the weekly time frame, this leading tech name deservedly becomes a stock to buy.
Advanced Micro Devices (AMD)
The next of our tech stocks to buy are shares of Advanced Micro Devices. The semiconductor outfit went from leading the market higher as shares put together a fully-formed cup-shaped base and near test of its all-time-high in just over a month from AMD’s corrective low hit on March 18. But that was as good as it would get for shareholders.
Advanced Micro shares passed its role of relative strength leadership to other large-cap tech stocks, such as Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) to assist with the NASDAQ Composite’s heavy lifting over the past couple months. The good news, though, is that Advanced Micro Devices has bided its time in a constructive manner, as the stock established a bullish “W” base pattern alongside the cup base.
Combined, the two bullish, high-level corrective patterns have taken nearly four months to build. It’s a sturdy technical set-up in my estimation. And with AMD’s weekly stochastics trending higher in neutral territory — and confirmed by a supportive daily chart crossover — a rally through the “W’s” nearby mid-pivot is a sure reason to go long this tech stock to buy.
Spotify is the last of our tech stocks to buy. After much work over the last two years, the world’s largest music streaming platform has seen its shares work their way into a large and constructive-looking weekly pattern that’s taken on the shape of a triple pivot base. It’s bullish, and now nearing completion.
Spotify has been consolidating in a tighter handle pattern for the past three weeks with support from the 76% retracement level. The price action adds another layer of solid-looking technical evidence, which suggests a breakout to all-time-highs is close at hand.
For this stock to buy, I’d recommend waiting to purchase Spotify above the handle’s pivot high of $196.75 in conjunction with a bullish crossover in stochastics to confirm a momentum entry.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits. Investment accounts under Christopher Tyler’s management own Advanced Micro Devices (AMD) and AMD derivatives but no other securities mentioned in this article.