Gadget Stocks Get Their Mo Back
04/07/06 - 01:30 PM EDT
Richard Suttmeier
On Feb. 24, the gadget stocks I follow showed declining or oversold momentum. Now they all have rising momentum. Following the weekly chart profiles is taking precedence over stock valuations at this time. This is a characteristic of a momentum market. It's fair to say the gadget stocks are in one now.
Apple(AAPL Quote - Cramer on AAPL - Stock Picks) shares are regaining momentum as new iMacs and notebook PCs with chips from Intel(INTC Quote - Cramer on INTC - Stock Picks) give access to Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) Windows software. SanDisk(SNDK Quote - Cramer on SNDK - Stock Picks) is heading back up toward the high end of its trading range as demand for flash memory proves to be no flash in the pan. Sirius Satellite(SIRI Quote - Cramer on SIRI - Stock Picks) became 20% undervalued and bottomed as subscriptions passed the 4 million mark, helped by Howard Stern fans. Despite the dominance of the momentum characteristics, it's still worth reviewing the valuation picture. The technology sector began the year 10.5% undervalued and is now just 2.1% overvalued, while computer manufacturers are now 2.6% overvalued and electronics 9.4% overvalued. After its first-quarter hiccup, technology is swinging back to being a momentum trade, but be aware that the monthly chart for the tech-heavy Nasdaq has become overbought. The Nasdaq chart shows monthly and quarterly supports at 2288 and 2275, respectively, with monthly resistance at 2382. Technology has presented a difficult environment for a buy-and-hold portfolio strategy, but there have been trading opportunities for investors with the discipline to enter good-till-canceled (GTC) limit orders to buy weakness to a value level (a price at which my models project that buyers will emerge) or key longer-term moving average. Two guidelines I have been suggesting worked for Apple and Sirius in March. Investors could have bought Apple at its 200-day simple moving average at $58.19 on March 29, and Sirius at $4.40 on March 14, when shares became 20% undervalued. It takes discipline to enter these strategies, but the opportunities are there for the taking. I last profiled the gadget stocks as a group when they were in a price-correction mode, on Feb. 24. I updated some on March 9, and I posted to Columnist Conversation about Sirius when it reached that dramatic valuation level. Today's table includes new monthly and quarterly levels, which are based on the March 31 closes.| Good to Mo Gadget stocks see rising momentum |
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| Company Name (Symbol) | 4/6/2006 Price | Rating | % UV/OV | Fair Value | MOM | 5-Week MMA | Value Levels | Pivots | Risky Levels |
| Apple (AAPL) | $71.24 | HOLD | 3.80% | $68.66 | RM | $65.88 | 51.86 A | 66.66 Q | 74.76 Q/84.78 M |
| Dell (DELL) | $29.67 | HOLD | -16.10% | $35.37 | RM | $29.76 | 25.06 M | 36.40 Q/36.90 Q | |
| Hewlett-Packard (HPQ) | $34.10 | HOLD | 12.10% | $30.42 | RM | $32.66 | 26.97 A | 33.59 A/34.27 M | 35.36 M |
| Motorola (MOT) | $23.77 | HOLD | 22.30% | $19.44 | RM | $22.20 | 20.96 A | 21.78 Q/23.10 A | 24.19 Q/26.59 M |
| SanDisk (SNDK) | $63.32 | HOLD | 25.60% | $50.39 | RM | $58.08 | 51.30 S/50.18 Q | 72.31 M | |
| Sirius Satellite (SIRI) | $5.41 | SELL | 6.00% | $5.10 | RM | $5.25 | none | 6.78 M/7.45 Q | |
| Risky level: a price at which investors are likely to reduce holdings according to my models. Value level: a price at which my models project that buyers will emerge. M - Monthly, Q - Quarterly, S - Semiannual, A- Annual | |||||||||
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