Do Technology Stocks Have More Room to Run?
In a world of Apple Inc. (NASDAQ: AAPL) and Google (NASDAQ: GOOG), it can be easy to overlook technology titans from another era like International Business Machines (NYSE: IBM) and Intel Corporation (NASDAQ: INTC).
But the fact of the matter is that both IBM and INTC continue to keep up with the changing landscape of technology, and this ability to evolve and adapt has not been lost on investors, who sent shares of IBM and INTC to new, 52-week highs at the beginning of April.
Both stocks are up ahead of trading on Friday, following-through to the upside after modest midweek buying helped put an end to multi-day pullbacks, with IBM gaining more than 1% and Intel up more than 2%. Shares of IBM had closed lower for four days in a row before the recent advance over the last two sessions. Intel shares had sold off for four out of five days before buyers stepped in on Wednesday to take advantage of the first technically oversold conditions in the stock in months.
Both IBM and Intel are scheduled to report quarterly earnings next Tuesday, and with both stocks still showing positive edges of at least a third of a percent, the potential for additional upside ahead of those earnings remains strong. The one-point ratings downgrades in IBM and Intel have taken the stocks deeper into neutral territory. This further suggests that significant selling is not imminent.
If Google’s earnings announcement after the bell on Thursday is well-received, it may encourage buyers to look for other major technology stocks that have not yet rallied into short-term overbought levels. And in this, it is Apple that might actually be the beneficiary insofar as the stock has closed lower for three days in a row ahead of Friday’s open. AAPL earned a ratings upgrade midway through trading on Thursday, and now is only one-point below our “consider buying” category of stocks that have pulled back to levels where traders, historically speaking, have been more likely to buy in the short-term, than sell.
Note: Google beat analyst estimates after the bell on Thursday, and announced revenues that were essentially in-line with expectations. GOOG edged higher immediately after the news, gaining nearly 2% in the first few minutes of after hours trading. The company also announced plans for a 2-for-1 stock split.
Stocks, ETFs, options and more! Click here to learn how to get Larry Connors’ all-new, Daily Battle Plan for free for 7 days.
David Penn is Editor in Chief of TradingMarkets.com