Fresh off the short but strong Thanksgiving week, the stock market kicked off last week with a bang. Breaking through new all-time highs, the S&P 500 and Dow were bolstered by record-setting Cyber Monday retail sales. But by mid-week, the return of the "tech wreck" triggered frantic selling across the broader market. In today’s blog, we’ll discuss why the technology sector woke up on the wrong side of the bed last week, and I’ll explain why you can expect the sector to bounce back quickly.
First, as you know, the "FAANG" quintet—which is Facebook, Inc. (FB), Amazon.com, Inc. (AMZN), Apple Inc. (AAPL) Netflix, Inc. (NFLX) and Alphabet Inc. (GOOG)—is infamous for guiding the overall stock market. This time around, it was news surrounding Apple’s latest iPhone that drove the technology sector lower.
If you recall, Apple recently indicated that it was addressing supply concerns over its highly anticipated iPhone X, so fanfare built and the stock soared. And when Apple released the smartphone on November 3, its starting price of $999 didn’t even deter consumers. Current industry estimates put the number of iPhone X’s sold at about 15 million, with many of these sales culminating on Black Friday.
However, a new UBS survey dimmed Apple’s shine a bit. In their survey of 6,700 people across five countries, UBS found that sales may weaken in the U.S. and Europe. So UBS lowered its iPhone unit sales growth forecast from 12% to 10%. And when this news hit on Wednesday, profit-taking ensued and reverberated throughout the technology sector. With the exception of the Dow, the broader indices gave up their gains from earlier in the week. In fact, the Nasdaq 100 saw its worst drop in three months.
Now, I know last week’s "tech wreck" was concerning. That’s why I’ve deliberately designed my Blue Chip Growth Buy List with a diverse bucket of stocks. I’ve handpicked each of the 41 companies on the Buy List for their robust earnings and sales growth, as well as their abilities to pay quarterly dividends and issue stock buyback programs. And I strongly recommend that you properly diversify your personal portfolio by owning at least 15 to 20 of my Buy List stocks. To join Blue Chip Growth today, simply click here.
I also advise you to stick to my 60%/30%/10% rule. In other words, your portfolio should be filled with 60% Conservative stocks, 30% Moderately Aggressive stocks and 10% Aggressive stocks. You can find the ratngs on over 5,000 of your favorite stocks in my Portfolio Grader tool.
If you can follow these few guidelines, it will help smooth out volatility on bumpy weeks like this past one. In fact, many of our Blue Chip Growth Buy List stocks that pulled back early in the week are already starting to recoup their losses. And I look for this move higher to continue through yearend.