Buy Microsoft And KLA Corporation for Q4 profits.

There is no change in the market outlook. The market is expected to rally into yearend. The NASDAQ
NDAQ
100 and the technology sectors maintained their relative strength right through the autumn overall market decline. These stocks are expected to maintain this strength through December. Stock selection is a bit difficult because so many of these equities are overvalued and overextended, leaving few choices for new investments.

The Cycles Research stock screen identifies stocks that are strong both in terms of relative strength and cycles. The strength remains concentrated in big tech as we have seen in past postings. Yes, the stocks are elevated and valuations are lofty, but the market is telling us that these uptrends are intact at least into yearend and perhaps further. No change is expected in this trend. Microsoft
MSFT
and KLA
KLAC
are in the top five in the NASDAQ 100 screen.

Microsoft broke out of a major channel as we can see in the weekly graph below. The upside projection is well over $400. Momentum shows higher lows and is not overbought. Relative strength has hit a new high. The fourth quarter has been strong for the share price. From November 1 through December 31, the stock has risen over 70% of the time. Note that the monthly cycle ascends through the first quarter of 2024.

Microsoft Weekly

Microsoft Monthly Cycle

Microsoft Monthly Expected Return

KLA is ranked first in the NASDAQ 100. It has been the strongest stock in the index in the month of December and is number seven in relative strength. The monthly histogram depicts the seasonal strength. From October 8 through yearend, the shares have risen almost 74% of the time over 37 years. The monthly cycle ascends through the first quarter. Technically the stock is similar to Microsoft. Relative strength keeps hitting new highs. There is a breakout from a formation that points to $600.

KLA Weekly

KLA Monthly Cycle

KLA Monthly Histogram