Bond yields have tumbled as global economic fears have heightened.
For those seeking safety in the tech trade, these three sector plays could provide shelter, says Ari Wald, Oppenheimer’s head of technical analysis.
“Key for us is seeing this drop in interest rates the world over and signaling the threat of a slowdown in the global economy. We expect a premium to continue to be placed on these higher growth, large cap quality companies, and this includes a lot of your popular large-cap tech names likeApple,” Wald said Monday in a CNBC “Trading Nation” segment.
After underperforming the market at the beginning of the year, Apple has broken out this month. The stock has soared 9 percent in March, far better than the S&P 500’s advance of less than 1 percent.
Apple shares were up 1.8 percent Tuesday, a day after coming under pressure as the iPhone maker announced new subscription services, including a credit card and a streaming service.
“They’re planting flags in markets that are fairly mature and so I think that’s going to be challenging for Apple,”Gina Sanchez, CEO of Chantico Global, said on the segment. “I do think that Apple has to make a pivot, but … I think this is going to be a brand challenge for Apple if ever there was one.”
“For Microsoft, here’s a stock coming off a new cycle high in this mixed and questionable market tape. It held up better through the Q4 volatility, led on the way back higher as well, we see this as a sign of relative strength. It scores well in our momentum work,” said Wald.
He said Microsoft should find support at $114 after breaking out above that level in mid-March. It has rallied 3 percent since then.
“For Amazon, here’s a stock that’s probably the most tactical it’s been in years, and we say this looking at the stock’s weekly MACD [moving average convergence divergence indicator] inflecting positively from its most oversold condition since 2014 with a long-term uptrend that’s still intact as well,” said Wald.
The indicator has been trending upward since earlier this month, pointing to a change in trend.
“Broad-based strength, relative strength, you still want to own these high-growth companies,” said Wald.
Apple has added nearly 20 percent this year, Microsoft is up 16 percent, and Amazon has gained 18 percent.
Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.
Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network’s Global Headquarters in Englewood Cliffs, N.J. Santoli brings his extensive markets expertise to CNBC’s Business Day programming, with a regular appearance on CNBC’sClosing Bell(M-F, 3PM-5PM ET). In addition, he contributes toCNBCand CNBC PRO, writing regular articles and creating original digital videos.
Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.
Follow Michael Santoli on Twitter@michaelsantoli