Time to Invest in Technology Stocks May Have Come again
By Saghir Aslam
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Technology shares led the US stock market’s recovery last week from its worst correction in four years in August, thanks to gains in Alphabets, Amazon and Microsoft, after the three companies reported better than expected earnings results. The Dow Jones industrial average rose. The S&P 500 index recovered and the Nasdaq composite close the week up. Shares across Asia, Europe and the America’s all client, boosted by Thursday’s message from European Central Bank(ECB) Chief Mario Daraghi that he was ready to increase the ECB’s bond bind program, and by an interest rate cut by China’s Central Bank.
Factors this week that may provide further support for US stocks include a Federal Reserve Policy meeting, which is not expected to raise interest rates, a report on US economic growth in the third quarter and earnings from Apple.
Intl and Microsoft have seen their stocks recover more than 30 percent each since august, while Amazon and Face book rose 28 percent and 23 rd percent respectively.
But the “ underperformer” among these companies has been Apple, up only 14.8 percent from its August 25 close, less than the Nasdaq 100’s 15.1 percent gain in that time. However we may see Apple join the Band Wagon.
In contrast to Microsoft, Face book, Alphabet and Amazon. The bar has been raised a bit on its earnings report from where it was a week ago. The price action is telling you there is more optimism built into it.
Option market action shows traders expect Apple shares to move roughly 5 percent by the end of the next week. The average move for the stock the day after its report in the last eight quarters was 4.4 percent up or down.
The power of the moves in some of these large cap tech stocks has been breath taking.
Chip makers were also among the top five percentage gainers in the Nasdaq 100 since the index close at its 2015 low on August 25, with SanDisk topping the list with a 70 percent jump on the back of a takeover bid from Western Digital.
The overwhelming leadership from established technology companies is a positive for this market move higher.
The last time the Nasdaq 100 was the market leader a lot of it was speculative investments, but these (tech) companies actually return money to share holders. Tech deserves the leadership the stock market is rewarding growth. While technology stocks have let the market recovery, bio-tech stocks have been a drag on performance.
The Nasdaq Bio-tech index is down 3.5 percent from its August 25 close, and more than 20 percent below its year high. The three index components with the largest declines in market capitalization in the last eight weeks are Mylan, Illumina and Biogen.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)