Ideas for your watch list this week are five tech stocks that are holding up during the market sell-off: Apple (AAPL), Micron (MU), Applied Materials (AMAT), Square (SQ) and Ligand Pharmaceuticals (LGND).
Micron, Applied Materials, Square and Ligand Pharmaceuticals have Composite Ratings above 95, a hallmark of all-time stock winners near the start of big runs. Apple has an 88 Composite Rating.
Although these stocks are showing relative strength, it’s important to remember that the current market environment warrants extreme caution with regard to making new buys. The Dow Jones industrial average, S&P 500 index and Nasdaq composite fell sharply last week, with the Dow Jones and S&P 500 losing support at the 50-day moving average. But the Nasdaq did hold above its 50-day.
Apple
After a brief visit below the 200-day line in early February, Apple quickly rebounded and is now holding above the 50-day line, closing Friday at 176.21. After a long stretch of its relative strength line moving sideways or declining, the RS line has been rising for the past month, at 2018 highs and near its early November peak.
The Dow Jones component has formed a cup base with a 180.20 buy point, or an alternate entry at 180.71 if a handle forms. Unless you’re extremely aggressive, look for market conditions to improve before initiating a new position, even if Apple enters the buy zone.
Micron Technology
Micron rose to 49.11 on Friday, just below its all-time high of 49.89 and within range of a shallow double-bottom entry at 47.08. An alternate entry for the memory chip giant could be presented at 49.99. But again, investors should be cautious during choppy market conditions.
Applied Materials
Fueled by the momentum of a positive earnings report, Applied Materials has formed a double-bottom base as well. Applied Materials shares are trading 2% below a potential entry point at 58.83. Applied Materials, a leading chip-equipment maker briefly entered the buy zone last week, but never closed above it.
Square
Square attempted to break out over a cup-with-handle entry point of 47.60 on Feb. 28, after reporting strong earnings the night before. But shares of the mobile payments firm turned tail and closed the session below the buy zone. Square closed Friday at 46.02, near the entry, but market conditions need to improve to increase the chances that the breakout will work.
Ligand Pharmaceuticals
Ligand Pharmaceuticals has pulled back from an all-time high of 170.30, reached after a mid-January breakout from a cup base with a 149.41 buy point. But shares have found support at the 50-day line, with Ligand continuing to rebound higher from that level Friday. The stock is now once again extended from the cup entry, with the relative strength line at a 19-month high.
Ligand could be in the process of forming a new consolidation.
