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Pros See Upside In Tech Despite Chart Action

Wednesday, 18 Jan 2012 | 6:50 PM ET

One technical analyst’s perspective on recent tech rallies suggests a bear market, but the “Fast Money” pros saw opportunity.

John Mendelson, a senior managing director and ISI’s head of technical analysis, released a chart that shows the Morgan Stanley Tech Index trading below its 200-day moving average on significantly lower volume.

The index has trended downward since February 2011.

Chart of the Day: Tech Sector
The Fast Money traders take a look at the charts to see if the the tech sector is "technically" strong.

But there is a flip side.

“What there is on the other side of that chart is rising support levels and plenty of places to find a point of reference to put a stop in,” said Joe Terranova, trader and author of “Buy High, Sell Higher.” “I think if it gets through the 200-day moving average, it’s going to force a lot of money managers that have been sitting on the sidelines to have to buy the market.”

Jon Najarian of OptionMonster.com continued to see opportunity in tech rallies.

“I think you’re always foolish not to take money when you get the chance,” he said.

Najarian used Apple, whose stock hit $429.47 to set a new 52-week high, as an example.

“I’ve sold additional calls into it. I don’t think that they just grow straight up into the sky,” he said. “I think that you take advantage of opportunities like this. I’m leaving some out there still because I see some upside, but I am selling a significant amount of calls into it to take some of that money and sweep it back into my pocket where it belongs.”

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Trader disclosure: On Jan. 18, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long V; Terranova is long CSCO; Terranova is long TRLG; Terranova is long JNPR; Terranova is long DECK; Terranova is long NFLX; Terranova is long XOM; Terranova is long SBUX; Terranova is long AXP; Terranova is long EMC; Terranova is long MUB; Terranova is long IBM; Terranova is long UNG April $5 puts; Finerman owns AAPL; Finerman owns BAC; Finerman owns JPM; Finerman owns IBM; Finerman owns MSFT; Najarian is long AAPL; Najarian is long GS; Najarian is long LLTC; Najarian is long KBH; Najarian is long CQB; Najarian is long EMC; Najarian is long CREE; Najarian is long FCX;

For Amelia Bordeau
No disclosures

For Jeff Kilburg
No disclosures

For Sean Egan
No disclosures

For Carl Kirst
TRANSCANADA (TRP): BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months.

This issuer is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12 months: Non-Securities Related Services.

BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of this issuer.

For Fred Moran
Benchmark makes a market in the securities of Amazon (AMZN).

For Brian Stutland
Stutland Equities holds hedged positions in VIX futures and options.

Stutland is long and short calls in AAPL

Stutland is long and short calls in INTC

Stutland is long and short calls in IBM

Stutland is short TLT puts

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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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