Tech stocks, which were underperformers at the start of the year, have made their way back as investors have been buying on the dip. Many of these stocks, which include Applied Materials Inc. (NASDAQ:AMAT), KLA Corporation (KLAC), and Amdocs Limited (NASDAQ:DOX) are currently in an uptrend and are expected to continue this momentum.On August 30th, the Technology Select Sector SPDR ETF (NYSE:XLK) hit its peak at $159.36. The ETF proceeded to fall 7% through October 3rd as volatility hung over the markets due to a host of investor concerns and rising yields. But tech stocks have rebounded since then, almost reaching their peak. The XLK is up 7%, compared to the S&P 500's gain of 5%.
This has lifted the names of many tech companies as bargain hunters have been buying on the dip. Many of these companies are in a bullish trend and showing positive momentum. But the question is how long this will last. One way to see if this momentum will continue is to use the Momentum Grade in our POWR Ratings system.
If a stock has a Buy rating or higher and a Momentum Grade of A or B, there is a good chance the momentum will last. That's because our Momentum Grade doesn't just look at current momentum; it analyzes a stock's ability to outperform going forward. That's why investors should consider adding stock such as Applied Materials Inc. (AMAT), KLA Corporation (KLAC), and Amdocs Limited (DOX) to their portfolio.