For many investors’ this week, it’s is all about the earnings reports from a pair of technology heavyweights. But at the outset of a new trading month, May’s best tech stocks to buy and short have little to do with the headlines and a lot to do with durable big picture opportunities, both off and on the price charts.
Depending on where one’s attention is during this first trading session of May, the broader markets are sending up a mayday signal (pun intended). Trade tensions between the US and China tied to novel coronavirus squabbling certainly haven’t helped investors. But much of the blame lands squarely on the shoulders of Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) following “mixed” and “disappointing” quarterly results.
Apple is off 0.5% as investors focus on slower revenue growth and the company’s decision to suspend guidance for the June quarter due to Covid-19 related uncertainty. That said, overnight losses have loosened their grip on the stock. Upbeat comments from Tim Cook regarding a worldwide recovery from the pandemic may be persuading investors to pull up their bootstraps.
Trillion dollar-plus and tech stock peer Amazon is shedding a more decisive 6.50% after topping forecasts. Catching Wall Street’s attention, CEO Jeff Bezos announced a bold and costly new initiative in which the company will spend the ‘entirety’ of its $4 billion in second quarter profits to fortify its position in today’s and tomorrow’s post-coronavirus world.
Unsurprisingly, the broad-based, large cap S&P 500 is down by roughly 2% as the two tech giants shares were re-evaluated and digested following their respective announcements. Still, while many investors are allowing Friday’s heavier-than-usual, tech heavyweights to do their bidding, the new calendar month is ushering in fresh, longer-term opportunities for trading on other tech stocks:
These stocks represent opportunities for both bulls and bears in the sector.
Tech Stocks to Trade: Oracle (ORCL)
Source: Charts by TradingView
Oracle is the first of our tech stocks to trade. This weeks’ earnings headlines have shares under sympathetic pressure. But make no mistake, this enterprise software / cloud play’s shares are not only far from out, they’re a definite “buy.”
Since putting together a market-leading bottom in early March after delivering its own narrow quarterly beat, shares of Oracle have worked to solidify the monthly chart’s long-term uptrend. Now, while some stocks cry for mercy, Oracle stock is screaming “buy”to anyone willing to pay attention.
Bottom-line, strong technical supports from a bullish stochastics crossover out of oversold territory, monthly chart hammer confirmation,and the opportunity to buy shares near the candle buy point on today’s pullback make Oracle a clear winner.
Source: Charts by TradingView
The next name on our list of tech stocks to trade is Spotify stock. Similar to Oracle, the streaming music giant’s shares are a favored purchase due to an earnings beat on strong subscriber growth delivered earlier this week, plus confirmation from the monthly stock chart.
Technically, Spotify shares affirmed an undercut variation of a double bottom pattern within a larger bullishly-tilted channel this week on the heels of quarterly results. Unlike Oracle, I’d recommend investors hold off on this tech stock and wait for a ‘second attempt’ buy signal.
A purchase should only be considered if the price action Spotify stock above $152 and slightly back above April’s pattern pivot high. This entry is focused on getting on board as price momentum takes hold.
With stochastics crossing over just beneath overbought territory, I’m anticipating the weaker channel’s resistance is about to be broken and Spotify stock will take on more bullish leadership.
Given the company’s dominant industry position, shares still relatively new to the market and nice growth prospects to build its brand and eventually profits as well, there’s more than a bit of interesting support for this outlook to take shape.
Source: Charts by TradingView
The last of our tech stocks to trade are shares of Roku. I’m a fan, as well as an early adopter of the over-the-top streaming platform, though I eventually pulled the plug on cable with the company’s original device more than several years ago. But as a trader in search of investing opportunities, Roku stock looks risky near-term.
Technically, after enjoying a big-time rally from corrective lows, shares have that “mayday” look about them. The stock has hit downtrend channel resistance and simultaneously challenged the 62% retracement level from last September’s all-time-high. At the same time, stochastics are just now entering overbought territory and shares have confirmed a weekly doji topping pattern.
Bottom-line, Roku looks more well-suited for bearish positioning. However, earnings are next week so I’d highly recommend limited-risk options strategies in lieu of shorting shares.
Still, unless the price chart is telling us fabricated stories, until shares are closer to that other bottom-line on the price chart, Roku is better for watching Netflix (NASAQ:NFLX) or Disney (NYSE:DIS) programs than in your investment account as a long.
Disclosure: Investment accounts under Christopher Tyler’s management does not own any securities mentioned in this article. 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.
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