The accelerating speed of market swings can make it harder to find winning stocks like this one Microsoft (MSFT) and Apple ( AAPL ) , but opportunities remain in a surprising safe haven of technology sector bulls.
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How to make more money by handling faster market swings
Sector shifts that would take a quarter or two in the past are now happening much faster, John Kosar, president and chief market strategist at Asbury Research, tells Investor’s Business Daily’s “Investing with IBD” podcast. “They don’t do that anymore, they’re too fast.”
Audio version of the podcast episode
“I had to find a better way to be in the right sectors at the right time,” he said. “That was faster than waiting until you could see the relative performance on the chart, because by the time you see it, the trend has halved.”
Kosar says he looks at sector ETF asset flows in a model designed to quantitatively identify long opportunities and overweights in market sectors. And according to the model, the technology sector remains on top.
“The way the market is moving right now, there are a handful of mega-cap AI-related stocks that are really driving the bus,” Kosar said. Investors are treating larger-cap tech stocks like Microsoft shares and Apple shares as safe havens, flowing into other areas like utilities or materials shortly before pulling back into tech.
Here’s how mega-cap tech stocks are creating opportunities for investors.
Microsoft Stock Shapes Continuation Chart Pattern
Kosar says Microsoft stock is forming a chart pattern called an ascending triangle, which signals that its established uptrend will continue. Microsoft stock began to strengthen the pattern in March, with the stock’s declines steadily rising until the stock broke out on June 11.
Kosar says previous declines in Microsoft stock were caused by investor indecision, and the tech giant still has upside potential. He says that as long as the stock remains above the upper boundary of the ascending triangle, at 430.82, the stock could reach Kosar’s price target of 473.
Microsoft stock currently carries a composite rating of 94 and is ranked no. 1 in the Computer Software-Desktop group by IBD Research.
Apple’s AI delay creates opportunity
Apple stock is another name where Kosar says investors could benefit from investor indecision. Shares of the tech giant began to underperform in July 2023 as investors favored other tech giants against. Apple, which lagged behind its peers in being slow to reveal details of how it was playing the AI generation boom. But things started to change after the stock appeared on earnings in May and AI announcements in June.
“Nobody wants to buy it new because it’s too scary for them,” Kosar said. “Well, that changed when that news came out on June 11.”
Apple revealed its plans to bring generative AI to its products, including the iPhone and Mac computers. Apple shares broke out of its consolidation that day, rising more than 7%. Shares are now trading closely near all-time highs.
Apple stock remains extended from its most recent pivot point, but may be in the early stages of forming a new base with an entry around the 220 price level. The stock has a composite score of 92 and ranks no. 2 in the Telecom-Consumer Product Group according to IBD Research.
Market influence of Apple and Microsoft
While shares of Apple and Microsoft look bullish, they have extended from appropriate buy points. Investors looking to get in on these top tech names should be patient and wait for new entries to develop.
With AI paving the way for more growth ahead, the underlying story remains intact for both stocks. This, combined with the stock’s strong technicals, signals that their dominance is likely to continue.
For traders with portfolio allocations elsewhere, seeing solid action from Apple stock and Microsoft stock should still be seen as positive. Their outperformance supports the bull case for the broader market since their index weightings are so heavy.
Could sector rotation rear its head in a more pronounced way, leading to underperformance and index deterioration? Absolutely. This makes tracking these rotations especially important.
Click here to learn why handling market swings faster can help you make more money.
Follow Mike Juang on X at @mikejuangnews and in Topics in @namedvillage.
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