How to Trade Tech Stocks

How to Trade Tech
Stocks
By www.ProfitableTradingTips.com

http://profitabletradingtips.com/profitable-trading-tips/how-to-trade-tech-stocks
The stock market rally this
year has been largely driven
by a handful of high tech
stocks.

They rally and pause and
pundits proclaim their demise.

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And then they rally again! The
problem for a trader is how to
trade tech stocks that cannot
keep going up forever but
certainly have not yet run out
of steam.

reuters writes that Wall Street
hits record highs on strong
technology.

u.s. stocks rose on monday,
with the s&p 500 and the dow
hitting record highs with
growth sectors

such as technology in favor
again as investors appeared to
regain confidence in the
economy after upbeat
comments from federal
reserve officials.

nasdaq’s biotechnology index
.nbi rose 2.5 percent in its
biggest one-day gain since
february while the s&p’s
healthcare index .spxhc had a
record-high close.

the s&p technology sector
.splrct finished up 1.7 percent
after its second straight
weekly decline, which was
triggered by fears of stretched
valuations.

tech stocks have led the s&p
500’s 9.6 percent rally this
year.

“investors were temporarily
chased from the space but
many companies in the sector
offer growth which is difficult
to find in the market as a
whole,”

said mark luschini, chief
investment strategist at
janney montgomery scott in
philadelphia.

The continued rise of tech
stocks is based on the fact
that they are growing and on
the fact that many other
sectors are not.

But what happens when
growth slows or the economy
disappoints?

US Economy Going
Forward

There is no economic surge
forecast for the second half
of the year according
to cnbc and this should worry
anyone who is too heavily
investing in high tech,
overpriced growth stocks.

investors betting on a strong
pickup in economic growth
might want to consider a new
forecast hitting wall street on
monday.

the new york federal reserve
now expects u.s. economic
growth at an annualized rate
of 1.9 percent for the second
quarter, down from a 2.3
percent forecast.

the bank also expects
annualized growth of 1.5
percent in the third quarter,
down from 1.8 percent.

the u.s. economy grew at a
dismal annualized rate of 1.2
percent in the first quarter.

The Fed just raised interest
rates and plans to unwind its
$4.5 Trillion stash of bonds by
cashing out and putting the
money back in the US
Treasury.

This huge negative cash flow
will affect the economy as
well.

The Fed expects to raise rates
once more this year but if they
stick to their plan to only
follow the data that rate bump
may not happen.

How to trade tech stocks in
this environment is to do so
cautiously.

One approach for those who
have experienced great gains
in the run up of tech would be
in trading stock options.

Buy put options on stocks that
may already be overpriced.

This amounts to insurance
against a price collapse in the
event of a market correction.

Because you are the options
buyer you only need to
exercise the option in the
event of a price drop.

And if the price does fall you
can still sell at the contract
price.

How to Trade Tech Stocks

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