For most of 2023, the stocks of our six mega-caps have traveled in a pack and in one direction — up. But over the last month, the group has broken up and gone in different directions, with some continuing their upward climb and others plateauing or losing ground. That gives us the opportunity to evaluate our next moves in these core holdings. When making trade decisions for the Charitable Portfolio Trust, we like to use the S & P 500 Short Range Oscillator , a trusted indicator that indicates when the overall stock market is oversold or overbought. An oversold reading indicates the market has fallen sharply and could be due for a rebound. An overbought reading means the market has risen sharply and could be headed for a pullback. As of Thursday’s close, the Oscillator was in neither an oversold nor an overbought condition. In a similar light, research firm Bespoke Investment Group recently did a screen on several mega-cap tech stocks — including Club names Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Meta Platforms , (META), Alphabet (GOOGL) and Amazon (AMZN) — to determine which are oversold or overbought. Examining overbought or oversold stock levels could be helpful signals for investors looking to add or reduce exposure in a position. When evaluating these names, Bespoke reviewed the standard deviations above or below each stock’s 50-day moving average. If a stock is one or more standard deviation above its 50-day moving average, it’s classified as overbought. If it’s more than one standard deviation below its 50-day moving average, it’s oversold. Two or more standard deviations away from the 50-day moving average is classified as an “extreme” overbought or oversold reading. A neutral reading means the stock is trading pretty in line with the 50-day moving average and there isn’t much that stands out about its recent performance — at least on a technical basis; business fundamentals and valuations are not taken into account. Doing this exercise shows investors whether stocks — over a shorter period — are extended relative to their normal range, said Paul Hickey, co-founder of Bespoke. “It doesn’t necessarily mean if they’re overbought or oversold that there has to be a pullback or rally,” he added. “It just highlights the stock has had an extreme move.” Overbought and oversold readings may change depending on daily price action. Here are the recent trading ranges changes for our Big Tech names, along with our takes on the moves. Apple: Oversold AAPL 1M mountain AAPL stock month-to-date performance Apple’s plunge below its 50-day moving average was on Friday, Aug. 4, when it closed at $181.99, a roughly 8% drop over a 5-day period on the back of a better-than-expected fiscal third-quarter earnings print. During the June quarter, Apple’s product sales were short of expectations, which could have also contributed to the stock’s decline. Apple’s fiscal third quarter was enough for us to reaffirm our ‘own it, don’t trade it’ philosophy on the stock and raise our price target to $205 per share from $185. While shares of AAPL are not cheap relative to the market and its historical levels, it does offer steady, high-quality earnings streams. Moreover, we see a catalyst in its upcoming mixed-reality headset called Vision Pro. An oversold indicator combined with the company’s strong fundamentals and positive outlook could be viewed as a buying opportunity. We have a 1 rating on the stock. Microsoft: Neutral MSFT 1M mountain MSFT stock month-to-date performance Microsoft is flat but tipping toward oversold, according to Bespoke. The stock sunk below its 50-day moving average on Wednesday, Aug. 2, just days after the company’s strong fiscal fourth-quarter report on July 25. The company’s revenues beat across the board, but the stock fell 3.7% in after-hours trading as investors worried over higher capital expenditures to fund AI investments. With the stock up 34% this year, investors may have also been selling off to secure some profits. We’re committed to holding Microsoft for the long term, given it will benefit from secular growth from demand for its AI products. This should translate to a higher stock price this year, which is why we increased our price target on MSFT stock to $400 from $320. We last purchased shares of MSFT on July 31 and maintain a 1 rating on the name. Nvidia: Neutral NVDA 1M mountain NVDA stock month-to-date performance. Nvidia shares have been a bit volatile, falling 4% over the last trading week likely due to profit-taking. But the stock remains in line with its 50-day moving average. As our other “own it, don’t trade it” stock, we keep this chipmaker that is leading the artificial intelligence gold rush. Jim Cramer says there’s a lot more room left to run in the stock too as large tech firms like Alphabet and Microsoft double down on AI investments to power the ecosystem using Nvidia’s data center chips, which power generative AI and large language models. Nvidia’s short-term setup is a bit tougher , Jim said, given the stock’s outperformance in 2023, it could be due for a pullback, citing work from Larry Williams, a market historian and veteran technical analyst. “I do not think you should start to buy Nvidia right here. I think it’s going to go lower,” Jim added. The chipmaker is set to report earnings on Aug. 23, when we’ll be looking to see if management beats the superb forward guidance it delivered for the fiscal first quarter and signals for continued momentum in its Data Center business. In line with this view that a better buying opportunity may well reveal itself in the near term, we maintain a 2 rating on the stock. Meta Platforms: Overbought META 1M mountain META stock month-to-date performance. Bespoke’s technical view showed Meta stock entered overbought territory after the Facebook and Instagram parent delivered a strong earnings beat and guidance during its second quarter on July 26. Shares jumped roughly 7% in after-hours trading, to nearly $319 a piece. Investors were excited to see the tech firm’s savvy use of A.I. increase ad impressions displayed on an app, boost user engagement and increase more user time spent on apps, which ultimately led to accelerated revenue growth for the quarter. Out of all the Magnificent Seven technology stocks, Meta has been one of the best performers this year. Shares of the company have soared a staggering 153% to its current $305. Meta’s move higher is justified given it’s been able to strike the perfect balance between monetizing its products while reining in costs. Taken altogether, we think there’s more upside in the stock, which is why we continue to hold the stock and also raised our price target to $350 a share, up from $250. We maintain a 2 rating on the stock, indicating that we would be more interested in adding exposure on a pullback. Alphabet: Extreme overbought GOOGL 1M mountain GOOGL stock month-to-date performance. Alphabet delivered a very strong second quarter on July 25 that sent GOOGL stock soaring 6% in after-hours trading — pushing it into extreme overbought territory. The stock has been trending higher since on strong revenue growth in its core search business, a resilient advertising market, lower-than-expected capital expenditures and management’s ability to expand operating margins. We think shares can go higher over time since management has finally gotten cost growth below revenue growth. We bumped up our price target to $140 a share from $125 following the release. However, in line with Bespoke’s technical view, our fundamental view keeps us at a 2 rating on the stock. Amazon: Extreme overbought AMZN 1M mountain AMZN stock month-to-date performance. Bespoke highlights that shares of Amazon are in extreme overbought levels in the short term which means that it could be ready for a pullback. The reason: The stock jumped 9% off of better-than-expected second-quarter earnings on Aug. 3. Investors were encouraged to see growth at the company’s cloud computing unit, Amazon Web Services, finally start to stabilize after several quarters of slower growth. The segment delivered revenue growth at roughly 12%, which was 2 percentage points ahead of Wall Street expectations. In addition, there was continued growth at its advertising unit and further cost rationalization in its strong retail business. We think these positive developments justify the stock gains. Shares of AMZN may be overbought in the near term based on the 50-day moving average, so a technician may not find it all that attractive. However, we maintain a 1 rating because the fundamentals are finally improving. We’re only five trading days past the earnings report, meaning that about 90% of the data (45 out of the last 50 trading days) used in calculating the 50-day moving average came before earnings were released. For that reason we think AMZN can go higher, which is why we increased our price target on AMZN to $160. Shares of AMZN are up 64% this year. (Jim Cramer’s Charitable Trust is long AAPL, MSFT, NVDA, META, GOOGL, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
For most of 2023, the stocks of our six mega-caps have traveled in a pack and in one direction — up. But over the last month, the group has broken up and gone in different directions, with some continuing their upward climb and others plateauing or losing ground. That gives us the opportunity to evaluate our next moves in these core holdings.
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