Love 'em or hate 'em, tech stocks rarely have any trouble getting investors' attention.
Investors love tech because it's consistently one of the most exciting sectors to own. As I write, nearly half of the technology stocks in the S&P 500 are either up or down 10% or more so far in 2016. Compare that with the measly 2.7% return of the S&P itself since January.
And lately, the conversation has switched to value. After a sideways year in 2015, a handful of Wall Street's biggest tech stocks are looking like bargains again.
These stocks might have solid fundamentals, rapid growth rates and exciting products, but do their charts tell a different story? To figure out which tech giants you should buy heading into June, we're turning to the charts for a technical look.
First, a quick note on the technical toolbox we're using here: Technical analysis is a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market.
Here's a technical look at four giant trades from the tech sector.
It makes sense to start with Apple (AAPL) - Get Report . This tech behemoth has gotten a heap of attention lately, following the revelation that value-focused Berkshire Hathaway (BRK.B) - Get Report thought it was cheap enough to make a big investment. But it doesn't take an oracle to figure out Apple's price trajectory right now -- and it's not pretty.
Apple has been stuck in a downtrend for the better part of the last year. And despite some attempts at making it to higher ground, shares have failed to post a higher swing high since last summer. Until Apple can muster the strength to move above its downtrend, it makes sense to avoid starting a position in this tech giant -- or building onto an existing one.
From a fundamental perspective, Apple is a holding in Jim Cramer'sAction Alerts PLUS charitable portfolio. Cramer and Research Director Jack Mohr recently wrote: "Positive sentiment in the stock appears to have been revitalized of late, and while we expect the upcoming quarter to remain weak, Apple still has many bright days ahead in the back half of the year (with the iPhone 7) and beyond (emerging-market opportunities and Services business)."
Facebook (FB) - Get Report , on the other hand, is Apple's mirror image. This social networking company has been bouncing its way higher in a well-defined uptrend since last summer, moving up off of every test of the bottom of its price channel along the way. At the moment, Facebook is hovering around the midpoint of its price channel; while that's not an awful place to buy, value-seekers are better off waiting for the next test of trendline support before pulling the trigger.
The 200-day moving average has acted like a good proxy for support in Facebook's uptrend going back to last fall. If you decide to buy Facebook here, the 200-day is a logical place to park a protective stop.
From a fundamental perspective, Facebook is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio. Cramer and Research Director Jack Mohr recently wrote about Facebook's pending acquisition of virtual-reality audio firm Two Big Ears:
"For Two Big Ears, this is obviously a move that will help instantly scale their technology and tools as Facebook has a wealth of resources. For Facebook, this obviously fits perfectly with Oculus and with the company's long-term vision that VR will become the next-generation computing and interaction platform. Facebook, as we repeatedly mention, makes smart acquisitions aimed for the long term, and we expect this tuck-in to be no different."
Creative software company Adobe Systems (ADBE) - Get Report is breaking out this week. Since March, Adobe's chart has been forming a textbook ascending triangle pattern, a bullish continuation setup that triggers a buy on a breakout through $98. That breakout through $98 happened this past week, and it's carrying over into high probability upside for the week ahead.
Now looks like a good opportunity to buy Adobe. If you decide to pick up shares here, consider placing a stop on the other side of this stock's most recent swing low down at $92.
Some people like to call biotech stock Gilead Sciences (GILD) - Get Report the "Apple of biotech" -- and that's fitting right now based on the price action. Like Apple, Gilead has been bouncing its way lower in a downtrending channel for the better part of the last year. While shares tried breaking free of that downtrend at the start of April, shares never managed to make a higher high, and worse-than-expected first-quarter earnings results swatted shares back down into their price channel.
Like with Apple, it makes sense to wait for Gilead to move back above the top of its downtrend before buying this stock. This stock may have attractive fundamentals right now, but its share price could have lower to go from here.
Disclosure: This article is commentary by an independent contributor. At the time of publication, portfolios managed by the author were long AAPL.