Ride the wave or run for the hills?
That's how two traders approached Amazon, Apple and Microsoft on Monday as the broader market continued its march to record highs.
The three tech giants' stocks are responsible for more than half of the S&P 500's gains this year, according to Reuters and S&P Dow Jones Indices.
Newton Advisors' Mark Newton and BK Asset Management's Boris Schlossberg told CNBC's "Trading Nation" on Monday that it wasn't yet time to sell.
"If there's any one message, it's that consolidation sometimes can be something that refreshes," said Newton, founder and president of his firm. "It doesn't necessarily mean that the stocks are rolling over."
Pointing to a chart of Amazon, he noted that the shares have "started to kick back into gear," saying one of their recent breakouts paves the way for a run to $3,450 or $3,500 a share.
Amazon was up nearly 1% to around $3,315.73 in early Tuesday trading.
"Of the larger names, this is one that I would own," Newton said. "I certainly would stick in the FAANG stocks."
Fellow FAANG member Apple didn't look quite as "appealing" as Amazon, Newton said. FAANG is a widely used acronym for the stocks of Facebook, Amazon, Apple, Netflix and Google parent Alphabet.
"This is a stock that I don't mind trimming into end of year as it approaches these all-time highs," he said. "This one for me is not as big of a risk-reward."
Newton's bottom line, however, was unwavering.
"Until you start to see meaningful weakness, it's still going to be right to stick with these stocks. It's just not enough to suggest that getting out of the group as a whole makes a whole lot of sense right now," he said. "Really, until the group violates September lows, one still wants to be in them."
Schlossberg, who is managing director of FX strategy at BK Asset Management, said all three tech juggernauts "should continue to dominate in the near term."
"In a digital economy, the companies that have economies of scale, they're all rewarded, and every one of these companies has huge economies of scale," Schlossberg said. "In fact, I think the single biggest business threat to Apple, Amazon and Microsoft is really from regulators, not competition."
He predicted that a Biden administration's preoccupation with mitigating the Covid-19 crisis and ushering along an economic recovery would postpone near-term regulatory threats to the group.
"In the meantime, Apple has a new phone cycle coming up, Amazon continues to garner share in the retail space and Microsoft just completely dominates the corporate space," he said. "For me, I just don't think there's any reason for investors to abandon what's working. You'll have some minor fluctuations, but overall, as I said, the spoils go to the winner, and in this economy, it's a winner-takes-all type of a structure."
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