Tech stocks are hot on the investment radar these days. There’s no arguing that point. They’ve certainly been gaining steam as a result of the relatively recent popularity of wearable computer technology and other high-tech devices. Tech stocks are likely to continue to perform well during today’s tumultuous trading environment. This means you might want to take note of what to look for as you research which stocks are set to benefit most from this uptrend.
The key to successful investing in tech stocks is technical analysis, which involves studying the history of the stock and how it’s affected overall stock performance. This type of analysis isn’t typically associated with blue-chip companies, but there are exceptions. Nasdaq is particularly fond of these types of stocks, and as such, they make up nearly half of all daily Nasdaq volume.
When investing in Nasdaq stock, you’ll want to pay close attention to earnings surprises. In terms of technical analysis, this simply means looking at how a stock price changed in relation to its earnings per share (EPS) over the past year or so. If a stock has gained in value, then that’s a good thing. If it has dropped in value, then that’s a bad thing. The idea is that a stock market is driven by supply and demand, so if a company has great financial numbers, then that generally indicates that the company is healthy and should perform well.
However, that doesn’t mean that every great buy will necessarily translate into great profits. For instance, if a company has great financials and growth plans, but then doesn’t plan to launch a product until later this year or even later this century, then those stocks may be worth holding for the moment. Investors need to be careful about riding a stock only to watch it fall in a very short period of time.
Conversely, it’s also important to understand when you should sell a stock. This goes back to the basics of fundamental and technical analysis. If you find a stock has dropped in price by 20% in one day, but there’s no obvious reason for the drop (a big earnings surprise perhaps), then you might want to hang onto that stock. It’s great you found a bargain, but you’re going to have to ride the wave of that profit for some time before you can sell and recoup your losses.
That brings up an important point: sometimes you just have to hold a stock for a little while longer than you expected. If the market is moving against you, a great stock could quickly reverse, providing you with great gains. If you can act before the momentum picks up, you can ride out the short-term losses and make a great buy.
Finally, remember that timing isn’t everything. If you can spot the tech stocks that are set to rise quickly, you can get in at the beginning of its climb and get a nice profit from the move before the rest of the market takes hold. And don’t forget to check out some penny stocks. Often they’ll have higher volume, but they are less liquid. They’ll be a great buy for the long term, as they’ll likely stay up for quite some time.
Now that you know what to look for and where to find great stock buys, you can start taking action to make money. Look online for lists of good and bad stocks. Check out some penny stock newsletters. Invest in some of the rising hot stocks yourself. If you play it right, you can be one of the great investors making a great living from the Nasdaq.