What a great weak for tech! There were several blow out ears numbers in this momentum filled sector. We have huge returns in a number of our tech picks because of this. So the question comes up of when to take profits? Here at Elite Trading we believe this is an early stage for the tech sector with much research to support this. Our trading style brings us to look at each stock individually and trade around the position by taking profits and re deploying capital back into the stock on dips all the way to its peak. With this style of investing or you may call trading; risk is controlled and returns are maximized. That being said over all tech still has a long way to go and with the right technique you can make massive gains in volatile situations. Several companies increased future guidance on top of beating the street estimates. Why is tech performing so well in a market concerned with the subprime melt down, the Fed rate cut, and skeptical consumer spending outlooks for the holidays? One ultimate reason is the global growth story. The emerging markets are seeing us through our wall of worries here at home. Where would you calculate the market to be without the global growth story as a variable in the equation? IBM traded lower this weak due to its high percentage ties in tech supported systems in the financial / lending market.
The market pull back this week being the same time of positive tech earnings; puts us in a perfect timed position to deploy capital into this sector. When the market bounces off the support and the great Dow 14,000 mark becomes solid support the tech sector is going to perform in great favor for us! To see a chart with technical support of this go to Elite Trading & Speculation.
3 dimensional research brings another point of interest into our outlook for the market, and unique opportunities to increase capital. Discussing how tech is growing due to global growth while domestic growth seems to be slowing or possibly going into a new cycle / recession; we are reminded these two cycles do not exist in parallel historically. Without the global growth story in the equation the tech sector most certainly would not be trading at these levels or have a positive outlook. Our current overall market would not be in the same bullish stage, but the global growth story allows for a time period when these variables in the market are parallel and it gives us a great trading opportunity. Everyone on the street is over excited on the tech surge and the global markets. Numerous funds are over deployed in these sectors. With that in mind a lot of investors are overlooking the domestic opportunity in sectors that outperform during sluggish times. That being said we believe this is a great time to position ourselves in consumer staples and other specific areas that trade well in these conditions. We believe this is the underline catalyst for the big boys like Warren Buffet and Carl Icon to have positions in companies like Kraft, Coke, and the Rails.
Bottom line there is still money to be made in tech given the global growth story, but consider a strategic move in consumer staples or permits use this as a complex hedge to protect your precious capital.
Happy Trading !!!