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Did you make the most of the tech sector last month?

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If you shorted Research in Motion ( RIMM , quote ) and went long on Samsung ( SSNLF , quote ) last month, then you probably made a tidy profit. More profits are ahead as the trends Emerging Money reported on in April continue.

[caption align="alignright" caption="RIMM can't make money on Playbooks, but you can make money shorting RIMM."] [/caption]

Traders who shorted RIM in early April have done quite well. After jumping to $15 per share, Research in Motion is now around $11.80. It has fallen 8.46% over the last month and is down 18.62% for the year.

There's no mystery to this fall: consumers prefer Samsung and Apple ( AAPL , quote ). But where does the stock go from here?

Tech stocks like RIM are ideal for mean reversion transactions by traders and speculators to profit, which take advantage of temporary peaks and valleys in the market.

A stock speculator, according to Benjamin Graham, founder of the value school of investing, seeks to profit from the conditions of the market.

Stock traders, according to Wikipedia, "... usually try to profit from short-term price volatility with trades lasting anywhere from several seconds to several weeks... Several different types of stock trading strategies or approaches exist including day trading, trend following, market making, scalping, momentum trading, trading the news, and arbitrage."

Mean reversion trading gains for emerging market speculators and traders, whether going long or short, result from a temporary inefficiency in the markets. While over the long term financial markets are efficient, in the short term, as pointed out by legendary investor George Soros, they are "chaotic."

As the tech sector is very closely followed, the stocks follow patterns from which traders and speculators can benefit. Emerging Money has previously talked about how traders can profit from shorting Nokia ( NOK , quote ) and Research-in-Motion to gain from the rise in Samsung and Apple. This is particularly useful for those seeking to profit from Samsung as the stock is very thinly traded on the pink sheets.

Samsung and Apple can only get stronger over the next few months with the iPhone 5 reported to be coming out in the fall; RIM and Nokia will only get weaker. By taking advantage of these patterns, traders and speculators will continue to do very well indeed.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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