The megacap tech club is on the rebound.
Microsoft, Apple, Amazon and Google parent Alphabet — all onetime members of the $1 trillion market cap club — are sharply higher on Tuesday. However, the four remain deep in the red for the month as the coronavirus crisis deepens.
Craig Johnson, chief market technician at Piper Sandler, says a few key levels in each could offer an opportunity to jump into these stocks.
“This is where you want to pull out the playbook of, ‘Where do we really, really want to own these stocks?’ ... If you take a look first at a chart of Microsoft, if we see this stock pull back to say the $140 or $132 level area, you’ve got a lot of support down there from a long-term chart perspective. And if you’re a long-term investor, this is where you want to buy it,” Johnson said on CNBC’s “Trading Nation” on Monday.
A drop to the low end of that range at $132 would indicate an 8% decline from Microsoft’s current levels. Shares have already declined 12% this month.
Apple, another megacap stock hit hard by the sell-off, could be a buy if it has another downswing, says Johnson. He notes that the $225 level would present an opportunity to buy, a 10% drop from where it currently trades. It has not traded at those levels since September.
Amazon and Alphabet also have potential if they see a bigger drop. He identifies the $1,700 level for Amazon and $1,000 for Alphabet as buy spots.
“This is where I think it’s very critical before the washout takes place to pull that playbook out and say, ‘Hey, these are the levels where we want to step up and buy these stocks’ and writing some of the puts on these names in here, I think, is a great way to do it,” said Johnson.