The outlook for tech stocks

Only a few select technology industry groups have done well recently.

By Jun 14, 2013 3:46PM

Money and computer copyright Angel Muniz, JupiterimagesJohn Person sat down with's Nancy Zambell recently to give his take on profitable tech picks for the summer months.

John, the technology sector has been interesting. There have been pockets of it that have been very valuable lately, and other pockets that seem well overdone. We've heard about cloud computing...on and on and on and on about cloud computing. No one has really seemed to have done much with that in terms of stock prices. Do you have any place in that area at all?

It's real interesting that just, say towards the beginning first week of May, the world started to come alive with the knowledge that technology was now starting to be the place to invest. The funny thing is, some technology pockets had had a nice run.

I think that typically we do see a good run in the Internet, the computer sectors of technology, of the subsectors that take a run going into the end of May. That's why we have the sell in May and go away mantra. There're so many different sectors that run out of a seasonal strength that weight on the benchmark indexes like the S&Ps.

For technology, though, take a look at Google (GOOG), which was racing towards new highs over $900...yet Apple (AAPL) is pressing toward its yearly low. At the same time, it looks like people are coming out of Apple into Google.

Other names like Akamai Technologies (AKAM) had a nice run and have been performing in sync with the benchmark indexes. But technology as a whole, from a relative strength comparative analysis, has been underperforming the S&P. I think that that's probably going to continue as we get into the summer months.

Do you favor the hardware over the software?

I think the sector has actually been played out, to be truthful. I'd be looking for maybe mid-summer weakness to get back in that area. I think we do have some of the hardware, Western Digital (WDC) for example. I think Hewlett-Packard (HPQ) is a very underpriced stock, but I think if you take a look at where Hewlett-Packard's been trading relative to the sector and the overall market, it's gotten no respect.

I'm looking for maybe by July, I think, looking at some of technical tools that we use-relative strength is one, volume participation another. I like Hewlett-Packard, but I think it's got better value down around $18 from current price levels around $21.

When you look at Google, are you just shocked by the chart?

I think it's a momentum play. It's a part of people wanting to be in that need to be in. Also, there was a little bit of shorting going on and that's what helped propel it over $900.

At this point in time, it's now become an index. In fact, I'd like to introduce your audience to an index that's called Goosy. Most people aren't familiar with this, an alpha index fund that compares Google to the SPDRs. It's really interesting. I don't know if viewers remember the long-skirt/short-skirt index.

Yeah, the hemlines.

The hemlines, yeah. The theory would be that in good economic times, women's hemlines would be shorter, and in economically trying times or poor drawdowns in the economy, women's skirts would be longer.

This could also be an index that helps to monitor the performance of the overall economy. If the economy is doing well, people are pouring money into Google because they make a lot of money, of course, but a majority of their money is made on ad revenues. It will outperform relative to the S&P. I'd be looking for Google if we see that turn, that relationship.

All your viewers can type in the symbol GOOSY. I think they'd be pretty amazed at how that index has come about. It's not a tradable index per se, but it's an index that you can track to watch the performance of technology or Google...the new technology era versus the S&P 500.

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