Opportunity Knocks For Mobile Computing Stocks

By: Money_Morning

Jon D. Markman writes: Stocks swung from the rafters over the past week with a sense of drama that has been missing for the several months as bulls and bears battled over the 1,300 level of the S&P 500.

Like many round numbers of the past three years, this level is the dividing line between the view of optimists and pessimists, and it looks to me like the optimists are on the verge of another big win.

Markets first sank to lows Tuesday triggered by swelling concerns that surging crude oil prices could plunge the world back into a global recession, then bounced when opportunists figured that it worst-case political scenarios in North Africa and the Persian Gulf were unlikely to transpire.

The Dow Jones Industrials closed the week down 2.1%, while the Nasdaq fell 1.9%, the S&P 500 fell 1.7% and the Russell 2000 fell 1.5%.

The most important clue of the imminent rebound midweek was the fact that high-beta tech stocks not only stopped going down, but turned and reversed higher at key support levels.

A great example was the SPDR S&P Semiconductor ETF (NYSE: XSD) fund, which rose 1.4% on Thursday before jumping another 2% on Friday. Among the leaders in the group were chip makers leveraged to mobile handset devices, such as Atmel Corp. (NASDAQ: ATML), which bounced off its 50-day average to gain +2.6%, and Skyworks Solutions Inc. (NASDAQ: SWKS), which jumped 4.5% off its 30-day average.

Likewise stocks leveraged to the network equipment side of the Internet also rallied strongly on Thursday and Friday, as witnessed in the First Trust DJ Internet Index Fund ETF (NYSE: FDN), up 1.3% and 1.9% on back-to-back days. If you have been waiting for a chance to buy these mobile internet computing stocks at a discount again, the time is now as they are showing promising technical indicators not seen for months.

Why focus on the chip and networking stocks? The news of late has intensely positive for these companies. You may have heard that Amazon.com Inc. (NASDAQ: AMZN) announced it was getting into the streaming video business in a big way to compete with Netflix Inc. (NASDAQ: NFLX).

And you may have heard that Apple Inc. (NASDAQ: AAPL) is planning to launch a cloud-based ''streaming" music store to complement its iTunes download business. Google Inc. (NASDAQ: GOOG) plans to join the party by launching a cloud-based music store as soon as March; and Spotify, a private company, is in advanced talks to launch its unlimited music subscription service (currently only available in Europe) in the United States by summer.

Streaming music and video services put intense pressures on networks because they have to deliver billions of digital bits with no latency or errors, unlike downloads, which can take their own sweet time about error-checking and the like.

The more omnipresent these services become, the more online media providers need server balancing systems, chips from Cavium Networks Inc. (NASDAQ: CAVM), consulting advice from Cognizant Technology Solutions Corp. (NASDAQ: CTSH), storage from EMC Corp. (NYSE: EMC), and the like.

The news is really feeding into my mobile Internet theme, and I think major investors are going to take advantage of the recent dip in the equities of these companies. Vietnam war protesters used to say that the "revolution will not be televised." Now we can see that not only is the revolution televised, but it is streaming in high definition from a million cell phone cameras. Don't miss the investment opportunity.

The companies mentioned above are all good ways to play the mobile-Internet explosion. But there's one company that I view as my favorite for the potential that it offers. To learn about that up-and-comer, please click here to read our special report

[Editor's Note: Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.

It will take a seasoned guide to uncover those opportunities.

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Source : http://moneymorning.com/2011/02/28/...

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