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Wait for Catalyst to Get Back Into Apple, and a 'Strong Buy' Signal to Add to Google


An update on four tech names: Apple, Netflix, Microsoft.


We wanted to give Minyanville readers an update on four tech names that we have opined on recently.

The first name is, of course, Apple (NASDAQ:APPL).

Why do most retail investors lose money investing in the market? Emotion has a lot to do with it. Buying purely to buy without a real catalyst is a failure in strategy, or a lack thereof. Buying Apple on fundamentals clearly did not work as the stock retraced from $700 to $550. It was a pure guess to determine the fundamental valuation. Remember -- price leads fundamentals. You need a catalyst to buy or sell any investment. Our catalyst is our buy/sell ratings and our countertrend rating. We went along at a Strong Buy as the chart shows at $599 and reduced exposure at $691; we sat on the side lines as the rating was downgraded until we got an Approaching Oversold rating at $525. Everyone has an opinion on why the stock has sold off -- from product saturation, to momentum in earnings growth is slowing, to tax selling. But it's all irrelevant as we can only see it in hindsight. We last wrote on November 30 to start reducing exposure if you got long on our mean reversion trade at $525. On December 3 the stock hit a high of $594.59. We were looking for $610, give or take $10, as the article suggested.

At this juncture there is no reason to guess where Apple is going. We are looking for two catalysts to get back into this name: A rating increase from Strong Sell to at least a Hold (3 rating), or a Oversold level. There are too many other names working well to give Apple your capital.

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Next up we have Netflix (NASDAQ:NFLX).

Back on November 6 we discussed the fact that NFLX moved to a Strong Buy. If you went long this name, the stock is up 5% today and up 13% since that post. We would remain long at this juncture until we alert readers of an Overbought level.

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No positions in stocks mentioned.
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