Reducing risk on Intel, increasing risk on Apple

Both of my US tech stocks – Apple (AAPL) and Intel (INTC) – are down significantly in the past two months (see chart).

Image

I wrote last week that Apple seems to be bottoming after its fall.  The stock continues to find support in the mid-$530s.  I also wrote last week in a different post that Apple seems to be setting up for a head and shoulders top that should see it climb to $630 in 2-3 months (a 17% advance from here).  I think this is a good time to buy.

Intel on the other hand looks like it will just continue to grind lower until it flatlines.  However, the stock has a good dividend (4.5%) and I think it is undervalued in the longer-term.

So, I’m going to sell around half of my Intel holdings and use the cash to fund an additional Apple buy.

  • SELL INTC @ 20.12
  • BUY AAPL @ $537.93

POSTMORTEM

Writing today, 14th December, this pair of trades look like a bad call.  Apple (which I bought) is down 5%, and Intel (which I sold) is up 3%.  However, during the intervening month, those results were reversed: Apple was up 9% at one point and Intel was down 3%.  Apple’s stock has become even more volatile than usual.

Screen Shot 2012-12-18 at 1.13.51 PM

UPDATE

Today, 18th December, Apple rose almost 3% to $534 (only 0.7% below the purchase price). As I wrote above, Apple is volatile!

 

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