6/4 10 Best Ideas For The Week Ahead

As I mentioned yesterday, it feels like a rotation is set to begin now with tech possibly stalling out and the rest of the names catching up, the charts below paint that story as well. Tech is probably going to live and die with what Apple does at their conference this week. Rumors are Apple will release an AR/VR headset for $3,000 this week, which sounds nice in theory, but Facebook released Oculus years back and has barely sold 20m units at around $400. Of course everything Apple does comes with a high price tag, but this seems a bit egregious for a gaming system, when most people buy their kids a playstation or xbox for $500. I have to think that while I’m sure they will sell plenty, it won’t be enough to move the need for a $3T company. With that, we don’t know what other products they may release, that is just the main event. It also makes sense that tech would take a breather as these names have run so hard so fast, you’d be hard pressed to find one not trading at the top of its bollinger bands. Here are some of the big ones

Apple is actually outside the bollinger bands right now, that red line is top and the green line between 155 and 160 is the bottom.

Microsoft also at the top

Amazon as well

Now that doesn’t mean I’m closing my calls, those have 2.5 years to expiry and I’m playing it for the re-rating I think is due, but it does mean that short term, I think, tech will cool off. Apple and Microsoft are pretty much sitting at all time highs, I don’t think they will knife right through those with ease. Those 2 do make up 25% of the Nasdaq so if they do, the massive run in tech stocks should continue. Just remember rule 1 of the stock market is “buy what is being bought” not “buy what I think is a good stock or good value”. The candles simply are telling you what is or isn’t being bought

Lastly, until we break over last summers highs of 431.73, we are to assume that will be stiff resistance and a potential double top. So while we are humming along at 427.92 right now, just remember we haven’t broken out just yet till we rotate up over that. You can see that below on the monthly chart of the SPY. We’re close but expect a sizable battle there if we’re going to get through it, but until new highs are made, one must be cautious.

10 Best Charts For This Week