While I believe much of the price action in the most actively traded technology stocks to be rather unpredictable, there are specific price points at which the odds can be in your favor. Because so many traders believe in chart reading, or technical analysis, the price action often becomes a self-fulfilling prophecy (as I've written about here). So, let's take a look at some popular names with traders:Apple Inc (NASDAQ: AAPL), after a big drop, has already put in solid sideways price action and if it can break $140, there looks to be a rather clear path to $160.
Research In Motion Ltd (NASDAQ: RIMM) has weathered this storm incredibly well, putting in a solid double bottom in the low $80s and more recently, holding the key $100 level. There's still resistance at both $110 and $120, so a big breakout doesn't seem likely anytime soon.
Priceline.com Inc (NASDAQ: PCLN) is still in the midst of a strong yearlong uptrend, a mere $10 off its highs. On any market rebound, I fully expect this stock to break out to new highs.
Amazon.com Inc (NASDAQ: AMZN) pulled off a massively bearish multi-month head and shoulders chart pattern, but since its business is really humming along, I wouldn't be caught short.
Google Inc (NASDAQ: GOOG)'s chart is even more bearish; I'd never try to catch such a well defined falling knife. But its business is healthy until proven otherwise, so I wouldn't short it either.
On the other hand, Chinese search engine company Baidu.com Inc ADR (NASDAQ: BIDU)'s chart offers such a ridiculously perfect bearish head and shoulders pattern, it'd be irresponsible not to look to short the stock -- especially on any bounce -- no matter how good business is.
And last, but certainly least, is the hugely traded, but disappointingly non-volatile Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio Holdings (NASDAQ: XMSR). Bleh! Sure, their stocks might be bottoming, but what's the upside -- $1 or maybe $2 per share? C'mon, you're better than that -- I'd avoid both stocks!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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Reader Comments (Page 1 of 1)
3-24-2008 @ 10:30AM
MVG said...
I love how as soon as you say avoid it, the stock jump 50 cents. Is there anyway I can get you to advise the avoidence of all my stocks?
3-24-2008 @ 10:47AM
Joyce L Williams said...
to update an ad listing of the volatile market of past inducements, we are definitely looking at a convoluted volume of indorsed elements taking us to the extreme of hedging and volatile enforcements to major indicators for ad libbing the
market. as recent voluminous increases occur at a
fundamental flag we shall see if the DOW will stall at a rate inducive of all indicators at a balance against the market indicators of the NASDAQ and the current aspect of the S&P 500
3-24-2008 @ 1:52PM
tim said...
50 cents/share on a big tech company is nothing, but I am glad PCLN has already made my prediction come true, surging $12 to a new high!
Tim
http://www.timothysykes.com
3-24-2008 @ 7:35PM
KenC said...
So, Apple broke $140, that means we should now see clear sailing to $160, right?
And, what's a classic head and shoulders pattern? What time period are you looking at?
3-25-2008 @ 4:30PM
meir said...
Let's see, Cramer says Bear is worthless and it quadruples, you say BIDU is a clear sell and it jumps not the fifty cents you cite but 35 points. Good calls. I think I'll try Chinese pick-up sticks.
3-25-2008 @ 4:34PM
tim said...
Actually if you read the article, it says to short BIDU on a bounce. Don't know where you came up with the 50 cents, you have a vivid imagination, are you a painter? Maybe you're referring to the $1-$2 upside in XMSR/SIRI, which occurred perfectly, but no more. Anyway thanks for the commentary to help proving my point!
Tim
http://www.timothysykes.com