The rapid pace of market rotations makes picking winners like Microsoft (MSFT) and Apple (AAPL) tricky, yet opportunities still lie within the tech sector’s standout stocks.
Market shifts, which used to last months, now occur almost instantaneously, John Kosar, president and chief market strategist at Asbury Research, mentioned on Investor’s Business Daily’s podcast “Investing with IBD.”
Kosar adapted by developing a model to track sector ETF asset flows, aiming to spot long and overweight opportunities swiftly. Currently, this model highlights the tech sector as a top performer.
“The way the market’s moving now, there’s a handful of mega-cap AI-related stocks that are really driving the bus,” Kosar explained.
Investors consider large-cap tech stocks like Microsoft and Apple as safe havens, briefly venturing into utilities or materials before retreating to tech.
Kosar observed that Microsoft stock is forming an ascending triangle chart pattern, indicating an ongoing uptrend. Starting in March, Microsoft stock saw consistent rises until a breakout on June 11.
Earlier lows in Microsoft stock reflected investor indecision, but Kosar sees upside potential. As long as the stock stays above the triangle’s upper boundary of 430.82, it could reach his target of 473.
Microsoft currently boasts a Composite Rating of 94 and ranks No. 1 in the Computer Software-Desktop group, according to IBD Research.
Apple stock, lagging behind its peers due to delayed AI announcements, began to turn around with positive earnings in May and AI news in June.
“Nobody wants to buy that new high because it’s too scary for them,” said Kosar. “Well, that changed when that news came out on June 11.”
Apple revealed its AI plans for iPhones and Macs, leading to a 7% surge.
Currently trading near all-time highs, Apple stock is forming a new base around the 220 price level, with a Composite Rating of 92 and ranking No. 2 in the Telecom-Consumer Products Group, per IBD Research.
Despite their bullish outlooks, both stocks are extended from ideal buy points. Investors should be patient, waiting for new entry opportunities. With AI business driving future growth, the fundamentals for both stocks remain strong.
For traders with diversified portfolios, the strong performance of Apple and Microsoft supports a bullish market view due to their significant index weightings.
However, sector rotations could still impact their performance, making it crucial to track these shifts closely.
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