How you can profit from a bounce in the likes of Facebook, Apple and Twitter?
In the investment community, there's a common phrase that says, “Don't try to catch a falling knife.”
The phrase basically refers to trying to buy falling shares. The analogy being that if you pull it off, it can be very impressive. But if things go wrong it can be dangerous.
Well, right now there's one falling knife that you do want to catch.
And that's the falling US tech stocks like Apple, Facebook and Twitter.
In fact, even the US based Oppenheimer & Co fund believes now is the perfect time to buy these stocks.
US Technology stocks have fallen 20% from their highs this year – Now it’s time to buy
Bloomberg reports that Oppenheimer & Co is looking to load up on US tech shares for three simple reasons.
1. High beta stocks magnify the moves of the markets. And US tech shares are about as high beta as you can get. And having fallen already, the bounce in this sector will far outstrip anything the rest of the market does.
2. Historically, US tech stocks outperform the rest of the US market between April and August.
3. According to analysts at the Oppenheimer fund, when a basket of equally weighted shares starts to outperform the weighted share index, this signals the potential for “broad-based sector leadership”. In other words, the individual shares will lead the sector higher. And that’s happening right now!
And it’s not just the Oppenheimer Fund that’s calling a buy on US tech shares. Legendary trader Mark Mobius also believes US tech stocks are a buy now.
So how can you profit from a bounce in the likes of Facebook, Apple and Twitter?
One of the best stock market tips I can give you is, if you want to trade offshore stocks, you need to use the JSE IDX futures. These are instruments traded on the JSE that allow you to buy exposure to international shares.
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These are a great option if you want to trade the short-term moves of these shares. That’s because these IDX futures give you gearing.
So that means you only have to put down a small portion of money to get exposure to a large holding of international shares.
The benefit of this is, if the US tech stocks recover the 20% to their previous highs, the gearing of these IDX Futures could magnify this move into a 200% gain.
On top of this, because these IDX Futures trade locally on the JSE, you don’t have to get any clearance from SARS or use your offshore allowance to trade these shares.
All this makes these IDX Futures the perfect way to profit from the coming bounce in the US tech shares that the Oppenheimer fund is calling.
To take advantage of this potential profit opportunity, contact your broker today and ask him about trading IDX Futures.
Until next time,
Here’s to staying ahead of the game.