Can Technology Stocks Lead?

08/26/2013 2:30 pm EST


As we enter the fall, Moneyshow's Jim Jubak is looking to the technology sector to see whether it can succeed in leading the market higher.

Right now, I'd argue that technology stocks count. I know it's not a sector that you've probably been paying a whole lot of attention to, but we're about to go into the strongest part of the year for technology stocks. The strong part of the year, seasonally, tends to run from like, oh, October 10 to early January. It's based on the fact that there are a lot of technology sales at Christmas. You get a lot of people buying electronics. You get a lot of companies using up their allocations, so buying equipment or at least placing orders for the equipment before the money vanishes with the end of the year. You know how this works if you've ever worked in a business where you had to buy stuff. Your budget expires. You got to spend it. So, this is usually the time when technology starts to do best as technology investors anticipate better earnings. Stocks tend to start to drop off in January with the Consumer Electronics Show and a move toward a weaker set of seasonal numbers. So right now, the question is, are you going to get numbers from companies like Cisco, and Qualcomm, and Intel, and Apple, strong enough to move the whole market, because if you're looking for leadership in the US market, it's hard to find a place where it's going to come from.

Financials aren't going to provide it. They're worried about the Fed. Consumer goods don't look like they're going to do it. Consumer discretionary doesn't look like it's going to do it, so the classic place to look for leadership in the market, at this time of year, would be technology. So far technology hasn't really stepped up to the plate. We've got numbers from Cisco that say they're going to cut 5000 employees; we get an announcement from Apple, an event really, about the new iPhone on September 10. If that generates some buzz, then we'll see Apple continue its rise. The stock has climbed from $380 to $500. That's pretty good. Going to keep going-we drive the market. We see some signs of life in Intel but, mostly, in terms of analysts upping their rating on the stock, but there's pretty slim pickings right now. We're not going to see anything from pc companies, because the pc market is declining. So is there enough, sort of, volume here, enough momentum, to have technology work as a leader for the market going forward. If we start to see that in the sector, and I watch the sector carefully, I think it means that the rally has some legs. We'll get a good recovery, I think, in October and November, and that's what I'd be looking for from the sector, as we end 2013.

This is Jim Jubak for the video network.

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