I just wanted to highlight the weakness we've been seeing in technology recently. In mid-August, the Nasdaq was easily outperforming the S&P500. But, as we've slid into September, technology has given back its gains. I've been waiting patiently to add to some tech positions that are typically high-flyers. And, it looks as if that patience is finally going to pay off, as I can finally start to get back into some names I've been looking to add to my core long term positions. As I wrote about here, you've got to be prepared for inflationary or deflationary investment scenarios. While it's still unclear whether we're heading straight towards a deflationary environment, it never hurts to be prepared. At any rate, in that post, I highlighted how in both an inflationary or deflationary scenario, it usually pays off to be long technology. So, with that in mind, my longer term portfolio is looking to add to tech names to hold for the long term.
I bought Qualcomm (QCOM) back in June as I detailed here, and it has paid off nicely. I took some profits, decreasing my position size on the most recent gap-up in July (see chart below). And, I've been waiting forever for QCOM to start dipping back down to fill the gap to re-add what I sold. So, we're finally getting that dip and I'll be looking to buy QCOM for the long term at around $48 and then again at $44 if it trades that low. I like it at $48 because it offers a decent level of support. And, not to mention, I initially bought QCOM back in June at around those levels. So, you can bet I'm more than happy to add back at that level. I've got a secondary limit order around $44, which is right around both the 200 day moving average and a nice level of recent support. Then, for safety, my stop will be placed a point or two below that last limit order, below the 200 day moving average. Because, if that area is taken out, the stock is headed much lower as it will have violated its solid uptrend.
(click to enlarge)It's not quite to my first limit order yet, but it's getting there. There have been a few negative catalysts recently which have started to send the stock lower, and I'm happy to see it happen! Seriously, I've been waiting to re-add to this position forever it seems. Yesterday, as StreetInsider detailed, Goldman Sachs removed QCOM from its Conviction Buy List. And, the day prior, QCOM's CEO was on CNBC saying, "We're seeing some evidence there's a lengthening of replacement cycles." Which, to put it plainly, means that people are putting off buying new cell phones. This near-term weakness was fully expected, seeing as how the US and other parts of the world have slowed recently. So, I will use this near-term weakness as an opportunity to start building up my position for the long term. Because, as I said before, going long technology fits both my inflationary and deflationary investment scenario models. I've picked Qualcomm simply because they're dominant in their industry and continue to perform. And, not to mention, QCOM is definitely a 'hedge fund favorite,' meaning that tons of funds have a large position in the name. As I wrote about here, Maverick Capital has a large position in the name; as does Lone Pine Capital, which I wrote about here. It's always reassuring to see respected funds with large positions in a name you follow, because undoubtedly their teams have done more research on the name combined than I most likely could ever do alone.
So, that sums it up. I will exit the name if my pre-determined stop gets taken out, or if I see a material shift in their business, which would affect their long term ability to meet estimates. But, I will definitely be looking at the tech sell-off as a place to try and establish longer term positions
