Monday, August 20, 2012
Big Cheap Tech is breaking out to the upside... Are you onboard?
For nearly two years, we've encouraged readers to get interested in "Big Cheap Tech." When we say "Big Cheap Tech," we're talking about America's leaders in tech-related industries, like software, Internet infrastructure, and semiconductors.
As we've mentioned many times, most of the "dominators" in this space (like Microsoft, Cisco, and Intel) are cheap relative to their annual cash flows. Plus, these blue chips have huge cash piles on their balance sheets.
These stocks have served as fantastic "foundations" to build covered call programs around. For example, in 2010, we showed readers how to set up a safe, 17% annual income stream with software giant Microsoft.
A good way to gauge this sector is with popular tech fund QQQ. This fund has large weightings in these dominant companies... like Intel, Apple, and Cisco. Like most assets, QQQ enjoyed a big rally to start the year. It declined during the spring... and spent several months "digesting" its loss.
But as you can see from the chart below, QQQ is breaking out to new highs.
Remember... a "breakout" is simply the price at which an asset "breaks" into fresh price territory. It can come on the downside or the upside. Whatever the direction, no trend can start without one. And the trend here is up.
The world's dominant tech stocks are cheap... And they are breaking out to the upside. It's a recipe for more gains ahead.
– Amber Lee Mason and Brian Hunt
In June, DailyWealth editor Steve Sjuggerud showed readers how to get a major Big Cheap Tech player… for free. The stock ran up sharply this summer. But using Steve's method… if you buy today, you can earn your entire investment back in just over six years. Find out more here.
S&P 500 breaks through April highs... touches its highest level in more than four years.
Facebook plunges to a new low as pre-IPO investors are allowed to sell more shares.
Retailers are booming... Gap, Chico's, and Ann Taylor break out to multiyear highs.
European "culprits" Spain and Italy are at their highest levels since early May... still down 25%-plus since last summer.