Some tech stocks can resist a rising rate environment
Two traders say that some tech stocks can still succeed in rising rate conditions.
On Wednesday, the Fed said it plans to accelerate the tapering of its bond purchases to mitigate higher inflation, indicating as many as three interest rate hikes in the following year.
On Wednesday, Danielle Shay from Simpler Trading said that besides that high-growth tech stocks underperform when rates grow, a few of them might surprise the upside in the previous months.
The company’s director said that he primarily focuses on Microsoft and AMD. He added that both showed consistent quarterly and yearly growth regardless of the market conditions. Danielle Shay also said that they could be a little bit volatile when the market stretches back. However, it seems that buyers come into these names in the long term, especially at critical technical levels. Shay said those levels include 50-day moving averages near where the stocks are now trading.
In the same interview, he said the previous rally after the Fed meeting did not seem surprising for Quint Tatro, Joule Financial Chief Investment Officer. Tatro said that in his opinion, there’s a good price level that investors trade against at the end of 2021.
He admitted that ARKK might struggle in the following year but said its 23.6% drop positions it up for a change into the end of 2021.
Tatro named Intel as his longer-term pick. He said it is affected now, but it remains a tech name with a great balance sheet for the possibility to trade better in the next year. He explained that he likes the idea that the company can unlock the Mobileye value via an IPO.
According to consulting firm Ernst & Young, the U.S. IPO market broke records this year, raising around $157 billion.
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