INVESTING: Powerhouse tech stocks may have more room to run

Keywords Technology
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Technology is cool, especially when you can profit from it in the stock market. There have been all kinds of breakouts in the technology sector the last eight weeks, and with the pullback occurring now, opportunities abound.

Let’s start with the big guy, Microsoft. (My fund owns Microsoft.) This stock had been lagging the market this year until it went bananas Aug. 2. The stock broke out that day on almost triple the average volume. It then climbed near $28 a share, a level it hadn’t seen in 3-1/2 years.

The nice thing about Microsoft is the base that’s been in place since July 2002. There’s a lot of support right underneath $26 a share, and a three-year base is a lot to work with. I expect Microsoft to outperform the market the rest of 2005.

There are a number of semiconductor issues that also look good right now. Motorola is trading near a five-year high, and Texas Instruments is only a hair below that.

I prefer to get exposure to this group through the semiconductor exchangetraded fund called SMH. It recently broke out of a 12-month trading range and has solid potential for the next few months. (My fund owns both Motorola and SMH.)

Semiconductors also serve as a nice barometer for the overall tech sector. When they are doing well, the broad NASDAQ has a decent shot at higher prices.

Remember Amazon? The stock has done well since it bottomed out at $7 in late 2001. It’s sitting at $45 a share now, and is trying to go even higher.

Amazon is struggling with a down trendline dating back about two years. But if it breaks above that, the stock could reach $70. This is a speculative play. There is better than a 25-percent chance the stock can’t break above the down trendline, and the price could plunge. But, hey, some people like to get a little crazy.

And if we’re talking technology, we can’t forget everybody’s new favorite, Google. This company has made an amazing run, tripling in the year it’s been public.

It is now one of the most valuable companies in the world. The stock has shown some consolidation the last few months. In late May, I said the $300 threshold would offer some resistance. It ended up peaking a little over that price and has settled into a range between $280 and $290 a share.

As hard as this might be to believe, the stock has a shot of going to $350. Any shareholder with an interest to sell has had plenty of opportunities since early June, but volume hasn’t picked up.

Investors simply aren’t interested in aggressive selling at these prices. There might be another six to eight weeks of sideways-to-down action, but by November this stock could be lighting up again. As with Amazon, Google is a more speculative bet. Keep an open mind, but treat it with caution.

The bull market that began in March 2003 is aging. Most likely, you can count the time it has left in months not years.

It’s typical, however, for the last months of bull markets to include powerful runs by a select few large-cap stocks. (Look at Apple, for example.) There are tremendous opportunities for those who exercise judgment.

Hauke is a local money manager. His column appears weekly.Views expressed here are the writer’s. Hauke can be reached at 566-2162 or at

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