There’s a lot to like about April, and I’m not just talking about decent weather. We’re entering what’s historically one of the market’s strongest, most bullish months – only December is stronger. And of course, this April, we’re riding a powerful, rising wave of economic recovery.
I’m looking at the Money Calendar right now, and I’m seeing lots of green. That’s crunching “just” 10 years’ worth of data. Zoom out even further, and you can see that in 60 of the last 92 Aprils, going all the way back to 1928, the S&P 500 has finished up, big time – 4.3% on average over those 60 “up” years.
And remember: That 4.3% is just an average for the whole S&P 500; you look at specific stocks, and you can see some much bigger moves.
So it pretty much goes without saying that this month’s biggest, most lucrative opportunities will be on the bullish side. Easy money.
The ones I’m looking at right now are all in tech, of all places – a sector that got beaten up six ways from Tuesday last month; there’s some strong upward momentum and big upside potential in these, especially if you trade them right.
Here are the tickers to know…
The Tech Sector Is Making Up for Lost Time
The Technology Select Sector SPDR Fund ETF (NYSEArca: XLK) that tracks the broad tech sector had fallen by close to 7% by the first week of March. Headlines were dominated by the rotation out of “pandemic” tech stocks and into “recovery” stocks like cyclicals and commodities. Every week last month we saw it sell off and rally, sell off and rally, and sell off.
In fact, in late March, I was talking about profiting on the flow of money out of the tech sector.
But April’s in full swing now – we’ve got that strong seasonality at work, and believe it or not, we’re not that far off from another earnings season. Since March 30, the XLK is up nearly 7% in a convincing rally that, when you think of it, is not only good news for tech investors, but really just more confirmation of the strong seasonal trend in the entire market.
In fact, these four tech stocks did unusually well in March and should do even better this month.
DXC Technology Co. (NYSE: DXC) is a large international business-to-business (B2B) IT services provider. The tech sell-off may as well not have happened as far as this stock is concerned. It’s currently hitting another high, having gone up close to 20% in March.
NetApp Inc. (NASDAQ: NTAP) is a data storage and management stock. This Cloud company has been a member of the Fortune 500 since the start of 2021 and is bound for further moves to the upside. It just set a one-year high last week, and it tacked on more than 10% upside in March alone.
Cisco Systems Inc. (NASDAQ: CSCO) ought to be familiar to everyone. The international tech conglomerate and “granddaddy of networking” just notched a 20-month high last week and closed out March with more than 13% gains.
International Business Machines Corp. (NYSE: IBM) is another famous name; it’s been in the computer business for as long as there’s been a computer business. It was up nearly 12% as of the end of March and, you guessed it, is near 52-week highs.
Now, you could go long and grab shares of any or all of these stocks and, April being April, you’d stand a good chance at taking down some easy double-digit profits before it’s all said and done.
But you don’t have to be satisfied with double-digit wins here, not when it can be just as easy to do much better.
The Best Way to Capture Profit Potential
Going to your brokerage and clicking “Buy” on 100 shares of IBM stock, at yesterday’s prices, would cost you more than $13,400 – before you tacked on fees and commissions. That much NetApp stock would set you back nearly $7,500. That’s pricey in my book – maybe in your book, too.
But with options, you can control just as much stock for a tiny fraction of the price – you could buy an IBM May 7, 2021 $138 call, 100 contracts, for just $269. NTAP May 7 2021 $76 calls are trading at just $135 – just think about your profit target and your time horizon and go from there.
If you’re into generating income and you want to lower the risk of buying the stock alone, you could write covered call options for every 100 shares you own; you’d pocket the premium right away, though there would be a chance you’d have to sell your shares.
If you’re moderately bullish on the stocks, you could put on a “loophole” trade called a bull call spread; you buy a call one or two strikes below the current price and sell the same number of calls one or two strikes above the current price – just make sure they’re for the same stock and expiring on the same day.
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Source: Money Morning