Buy This, Not That: When to Load Back Up on the Magnificent 7

Shah Gilani|August 7, 2024

I’ve got something different for you in today’s Buy This, Not That.

We’re looking at the Magnificent Seven… because they should be on everyone’s “Buy” list after this week.

Grab a pen and notebook… because you’ll want to write down what I have to say.

I’ll go over not only where they are and where they’ve just been… but also where I think you should buy them.

If you don’t own them already… this dip is your chance to get in on the next stage of the Mag Seven’s meteoric rise. (Because it ain’t over yet, people.)

It’s all in the latest episode of Buy This, Not That… your exclusive guide to the stocks that are worthy of your money.

Click on the thumbnail below to dive in.

TRANSCRIPT

Hey everybody, Shah Gilani here with your weekly BTNT, as in Buy This, Not That. This week, however, we’re going to do something a little different. I’m going to talk about the Magnificent 7 because they should be on everyone’s buy list. And for those of you that don’t own it or those of you that do own it, as in the Mag 7 group or any of the components, you might be wondering what to do now.

So I’m going to go over the Mag 7 and I’m going to talk about where they are, where they’ve just been, and where support levels are. Why is that important? Because the market’s acting crazy. I don’t think the selling is done.

Yes, the positives for the market are the economy is still chugging along. We’re not in a recession yet, even though things look like they’re leaning into a possible Goldilocks soft landing, maybe harder than soft, something like that. Because all of a sudden some of the metrics seem to be slipping and the worry is that the Fed is behind the curve again and should have cut in July and may have to do an emergency cut, which I don’t think they will. But the bottom line is there’s plenty of room for the Fed to cut rates.

That should be supportive of stocks in terms of this, shall we say, dust up, mini panic, crazy volatility because it is that and more. So yeah, there are some underpinnings of support and hope. Earnings, earnings are good. Earnings have not been great historically, but they’re pretty darn good, actually on track for a record this quarter when all is said and done.

About 70% of S&P 500 company stocks, companies have reported and margins are just fabulous. Really fabulous with a 12 handle on profit margins. So those are positives. Yes, it’s true, analysts are starting to cut earnings for the next quarter.

Why? Because they see perhaps a slow down that everyone else seems to be pointing to and they think that’s going to impact the earnings. And they already had lofty expectations for third quarter earnings. So we’re starting to see some downward revisions.

That’s a double-edged sword because it’s often easy to beat those downward revisions when we do get to the numbers next quarter. So a lot of decent stuff, but it’s impossible, and we would be foolish not to recognize what’s just happened. The leadership group has rolled over. And the question is, the big question is as far as the leadership group based on the AI narrative, have they overspent?

When will they be able to monetize all the spending they’re going to continue to have to do? And they’re all saying that they have to do it. It’s better to overinvest than underinvest. So that remains to be seen.

That’s a big unknown and that’s weighing on markets right now. So let’s go take a look at the Mag 7 in no particular order and I’m going to address where they’re trading and where support is because inquiring minds need to know. First up on the list, and I’m going to do a little screen sharing on this. First up on the list here is Microsoft, Big Daddy Microsoft, one of my favorite stocks.

By the way, I am recording this for your Wednesday BTNT on Tuesday night. It’s nearing on 11 o’clock. Now the thing I’ll leave with you here at 11:00 PM is I don’t know where the futures are going to be in the morning and I don’t know what’s going to happen tomorrow, obviously. All I do know is we didn’t close that sprightly on Tuesday.

Yes, we had a bounce. Maybe it was a dead cat bounce, but we didn’t close on the highs of the day. We didn’t close anywhere near there. We gave up most of the big gains that we saw earlier in the day.

And by the end of the day, everybody just seemed a little tired and we closed up on the day, but not very excited. S&P terms, we’re up 1% on the day. That’s opposed to being down 3% the day before on Monday. So yeah, I’ll just leave it at that.

Now Microsoft, here’s the dig on Microsoft. Closed on Tuesday 399 and change, as you can see. Yikes people. That’s down from 468 bucks back here in July.

July 5th to be exact. The low close on Monday here, 385 and some change. That’s below the 200 day moving average. As you can see, this red line, that’s the 200 day moving average, that’s at 404.

So we closed below, broke through the 200 day moving average on Monday. Couldn’t get above it today at 399. Again, 400 days at four, excuse me, 200 day moving average is at 404. Closed at 399.

Microsoft really has to consolidate between here and 437, people, for me to exhale. And I love Microsoft. Is it a buy down here? Yes.

I’ll be honest, I put an order in yesterday I didn’t get filled because I was trying to low ball at 385, trying to catch that low mark. It didn’t get filled. Too bad, I would’ve been happy because this is the kind of stock that if I get filled on a low ball order like that, I’m not just going to load up right there. If I think we’re going lower and I think we are, I’ll add on the way down.

But if we don’t go lower, I want to own some Microsoft. So yeah, I’m going to put another bid in at 385 and this time I’m going to leave it. That’s going to be my first tranche of Microsoft. Now so far as support, you got really, besides having to consolidate between here, between 399, really 404, the 200 day and 437, you got some support at 345.

Below that, it’s 310. That’s scary. So the only consolation here is you can see right here, Microsoft is a little oversold. That’s a small consolation given that pretty ugly chart.

But those are your levels on Microsoft. Next up, Apple. Now just like Microsoft, pretty ugly. Closed at 207, Apple didn’t even have a bounce today.

Closed at 207, people. Yikes, because that’s down from 237 on July 15th. That’s a pretty ugly chart. The low mark on Monday was 196 bucks and some change.

I’m not impressed. Yes, we’re still above the 200 day moving average as you can see here. But this is an off the cliff kind of move here. Below the 200, the 200, excuse me, below the 50 day.

The 50 day is 212. Apple closed at 207. It didn’t get, it couldn’t even reach above the 50 day yesterday, and it didn’t get close to it today on a rally day. Well it tried to rally, it ended up down almost a percent.

Apple does not look that good here. I’m concerned about Apple and of course it’s a leadership. It’s got support at 196. So right down here at this low end of this bar here, I’m going to say we got some support here.

Let’s hope it stays at 196 and doesn’t really get much below that. Below that is 187. The 200 day for Apple is 182. You got support there, people.

If it can’t hold 182, Apple’s going to go to 163. That’s scary. That’s really scary, people. I’m talking down here, I’m talking way down here.

Is it a buy down here? You bet your bottom dollar it is. Is it going to be scary if we get down there? Yes because something’s really wrong.

The market’s really selling off. But I’m just giving you some places that you want to watch or maybe buy or make sure if you are there and you got long-term gains, just get outta the way if you don’t know and you don’t sleep well at night. I’m giving you support levels and these are levels to watch because we get through them. Stuff is going to get really ugly people.

Alphabet closed at 160. Again, look at this rollover, people. Look at all these great moves higher, then bang, July, we are seeing nice moves, peak in July. July 10th for Google, 193.

Monday it got down to 156. Boom, that’s a rollover. Just above the 200 day moving average. So Google’s got some problems in terms of antitrust.

So they’re not done with that. They’re going to appeal the recent yesterday’s ruling that they are a monopoly. Yes, of course they’re going to appeal that. That’s going to last for years, but still that’s going to weigh on the stock.

Hence it couldn’t rally today. Ended up pretty much flat on the day. So Google trading 160 and change right now. The 200 day, people, is 154 and some change.

That’s your support right here, right on the 200 day. That’s your support. It’s really gotta consolidate between here and 177 for me to think we’re out of the woods. But beyond this support at the 200, your next support in Google, I hate to tell you, is 130.

Yeah, it’s down here, people, down here. That’s pretty scary if we roll over down here. By the way, it’s not that scary for me because I’m a buy at the dip kind of guy and I don’t care if we continue to dip from say 130. If I pick up some Google at 130 and I don’t care if it’s going lower, I would probably add, because I got dry capital.

I got stopped out of a lot of stuff and I’m sitting on a lot of cash and I’m ready to deploy and I’m looking for the market to go lower. So I’m not worried about that. But that’s where I’m looking. I’m looking for those kinds of levels where I’m happy to get in and I don’t mind holding because I’m getting in at great prices.

Next up is Amazon. Amazon, and this one is again, you’ll notice the similarities here with all of these charts. It’s pretty much the same story. This is what the market was afraid of.

Tech rolling over. Amazon was holding up but then all of a sudden just absolutely, sorry, earnings weren’t so good. Didn’t guide what everybody was hoping for. And gap, goodnight.

Say goodnight, Irene. 161.93 it closed at, up a tiny bit on the day. Now that’s down from 201.

So we’re 161.93 closed on Tuesday. That’s down from 201 on July 8th. The low bar yesterday, the low intraday yesterday, people, 156.

Can Amazon go back and test that? Yeah, so really you got some support there. What you’re hoping, we are all hoping if you own Amazon or you want to, if you just bought it, you want it to fill this gap in here somewhere between let’s say 170 and 180 thereabouts. Fill this gap, consolidate, and try and go higher.

That’s a big ask because it’s trading well below its 200 day, which is 168 and change. As far as Amazon goes, the only hope is to fill that gap, like I said, 169 to 177 range and consolidate there because the next support from here is 142. Below that, the next support is 120. Yes people, it’s scary out there.

I’m giving you support level, realistic support levels that I hope we don’t see. But frankly, if you’re sitting on a ton of cash and you’re looking to buy this dip, correction, come dip, come potential waning into a bear market if we get that far, yeah, you’re buying at the right prices. You sit back, you go out and do something else, go fishing, go play golf, go build something because these stocks will double, triple in the next four years. So I don’t mind buying lower and watching ’em go a little lower.

As long as I’m comfortable buying close to somewhere near the lows or expected lows where they have a chance to pop over the next, I think couple of years, three years. You’re probably going to average 25 to 50% a year if you buy these right. Next up is Meta. I’m not saying we’re going to go down there, folks, I’m just saying what if?

Everyone’s saying, today when we had the rally in the morning, everyone’s talking about, oh my gosh, look at, the Nikkei is up 10% after being down the most since October of 1987, and all of a sudden it comes roaring back up 10%. That’s craziness, that’s crazy. So when that kind of stuff is going on, that’s craziness. There’s a lot more to the story.

Suffice it to say the market is moving like that, it’s no offers. We’ve got vacuums, people vacuums. That’s a problem. This is not orderly trading, this is gap trading.

Meta closed the day at 494 and a little bit of change. Call it 9 cents, up 3.86% of the day, hanging in there. Gotta give Meta the credit of being the group leader in terms of hanging in there the best.

Kind of sideways, chugging along. Meta looks the best to me at 494, that’s down from four, excuse me, from 542 on July 8th. Oh Monday, it was 450. So I’m going to say that’s pretty much where your support is going to be.

442 to 450 is really where your support is. Below 405, which is pretty much below the 200 because the 200 day moving average is 434. So if you get down below 405, you’re well below the 200 day moving average. So there should be support.

I’m thinking we’ve got support here. Again, 442 to 450 range. Below that, we break through the 200 day moving average. Now if that happens, Meta’s been the stalwart so far.

Something’s wrong here because if it goes below that, it could go to 350. That’s scary, people. So mind your Ps and Qs on Meta. And next up is Tesla.

Tesla is the weakest of the group. Even though some people, huge fans of Tesla, I can’t say that I am, especially not the Cyber Truck. Don’t get it, see a lot of them around. But Tesla, people, closed at 200, up 0.88% on the day, 200 and change. But that’s down from its recent highs of 271. It’s a big drop, people. Monday, Tesla got down intraday low at 182.

Yes, it closed Monday at 198, but it got down to 182. So that’s really your next support down there, people. Again closed today, Tuesday, at 200. But 182 is your support.

That is below the 200 day, which is 203 right now. Tesla is trading below the 200 day, which is 203. If it can’t hold here, it can’t hold the lows from yesterday, which are 182, next stop is 165. There’s support at 165.

Below that, sorry to say, it’s going to be the 52 week low at 138. Yeah, that’s down here, people. That’s down here. That’s scary.

This is the kind of conditions we’re in right now. I hope that this too passes and we move higher, consolidate, carry on with the bull market. But you cannot not observe what’s going on and be nervous. If you’re not, then you just don’t know what you don’t know.

Last but not least is Nvidia, and Nvidia, of course the darling. What Goldman Sachs called the most important stock in the world just a couple of months ago. Yeah, we need Nvidia to help us out here because it leads the AI narrative story. Obviously the chip maker, par excellence.

Closed at 104.25 on Tuesday, up 3.78%. That’s a ugly chart. That’s a rollover chart, people.

That’s pretty scary. So as far as Nvidia goes, its recent high after the split was 140 on June 20th. 140, it’s now at 104. The Monday low was $90 and some change, people.

That’s a good bit below 104. So this bar here, the low intraday bar there is really where your support is. That is, I’m going to give that the low 90 and 69. That’s going to be some hopeful spot where you can maybe see this stock rest.

That’s the low bar from Monday. The low spot below that is trouble because below that, you got the 200 day moving average. The 200 day moving average, people, right here is 80.83. So if we break 182, you got 180, we got, you got 80, excuse me.

If we break, I’m going backwards now. If we break Monday’s low, 90.69 where my arrow is, if we break down that, that’s your nearest support. We break that, then the next stop is the 200 day moving average, people, which is 80.83.

So we got then we’re just likely Nvidia could collapse down to this 200 day moving average. And there is some support just below there at like 75. So between 75 and 80, there better be some support there. Next stop, below that, I don’t know, people, it’ll be scary because we’re back down giving up lots of profit, maybe 50.

Wow, that would be one heck of a haircut. That’s how things shape up. So mind your Ps and Qs, keep an eye on those support levels for all the Mag 7 stocks and I’ll be back with you next week. But what we would hope for collectively is a bounce consolidation, carry on higher.

But this may be one of those times where you might want to be on the sidelines watching, trying to figure out what the market wants to do. because the market’s going to tell you what it wants to do and right now it doesn’t know. If I was to guess, I would say the path of least resistance is down. Be careful out there.

Catch you guys next week, cheers.