The 'Magnificent 7' Tech Stars Rise Again, as Nvidia Punches Higher
Let's look at Apple and Amazon -- and why fans of the group of top names shouldn't get too excited. Also here's my stock pick of the week.
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The "Magnificent Seven" tech-star stocks are having their best day of 2024. Dip buyers finally showed up, and money is rotating from oil, financials, and BoeingBA into the big-cap technology favorites.
The most impressive of the Mag Seven is Nvidia NVDA , which is breaking a new all-time high. It is a good-looking chart as it takes out a triple top around $505. Early volume is also strong. NVDA is the best "value" among the Mag Seven and is a better safe haven than Apple AAPL on that basis.
My second favorite of the Magnificent Seven is Amazon AMZN , which bounced off support at the 50-day and has strong support at around $145.
My least favorite continues to be Apple, which is the most expensive of the seven. Even after dropping 10%, it is still not attractive, with a trailing price-to-earnings of 30 and single-digit earnings per share growth. Many long-term investors dismiss traditional valuation metrics when it comes to Apple, and that has worked well quite often, but there is a recent shift, and there is now more sensitivity to valuation than there was last year.
Overall breadth is running around 5,300 gainers to 3,600 decliners, but there are more new 12-month lows than highs today. This is mainly due to weakness in oil and energy, but illustrates how small caps still have significant room to the upside if market conditions improve.
I'm hunting for new buys but not finding much to do at the moment. The market is enjoying the bounce in the Magnificent Seven, but I don't see it as the start of a new trend.
My Stock of the Week is Ceco Environmental CECO . I picked this about a year ago, and it has made a solid move of about 50%. The company has been making strategic acquisitions in the environment sector and has raised guidance consistently. It had a very strong third quarter but has pulled back to support the 50-day simple moving average. I expect another strong quarter in a few weeks, which should put recent highs into play.
The action in The Magnificent Seven is helping the mood today, but those who are looking for a repeat of the action we had in 2023 are likely to be disappointed.
(AAPL and AMZN are among the holdings in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells stocks? Learn more now.)
At the time of publication, DePorre was long NVDA, AMZN, CECO.
