Earnings Evaluation: GOOGL, AMZN, AAPL | ChartWatchers

Three large bellwether shares introduced earnings on the identical day, after the shut, and so they all missed estimates. Does this imply the Expertise sector or the broader market will head decrease?

Not essentially. From a technical perspective, forward of earnings, the charts of Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL) have been leaning in the direction of being bullish. This is a technical perspective.  

Alphabet (GOOGL): What to Watch Out For

GOOGL’s breakaway hole on February 2 signifies some significance for the next causes. It betrays robust bullish sentiment on the day it is slated to report earnings after hours. It additionally locations share costs above three vital ranges of resistance:

• The 200-day shifting common
• The December 2 (2022) excessive resulting in the newest rounding backside, and 
• The October 25 excessive previous the bearish swing, which introduced GOOGL inventory to its lowest 12-month degree.

CHART 1: WILL GOOGLE STAY ABOVE ITS 200-DAY MOVING AVERAGE? We’ll see how the inventory reacts after its earnings report. If it goes above it, the 200-day MA may turn into a help degree. Chart supply: StockChartsACP. For illustrative functions solely.

• Relying on the situation, gaps typically get crammed, and the end result following the fill depends upon whether or not the preliminary bullishness was pushed by actual anticipated worth or overextended exuberance.
• For the present swing to develop right into a stronger pattern, GOOGL ought to stay above its 100-day shifting common. 
• A transfer under the January 6 swing low (at 84.86) would doubtless invalidate any uptrend thesis.

Amazon (AMZN): What to Watch Out For

Including the Ichimoku cloud overlay to the value chart takes care of among the vital factors a dealer must be searching for. The cloud helps determine pattern route, help, and resistance ranges. 

Whereas Amazon’s inventory worth could also be tempting to purchase given it gapped as much as its 200-day shifting common, it is best to take a step again and have a look at the larger image (see chart under).  

CHART 2: AMAZON IN THE CLOUD. The Ichimoku cloud overlay identifies help and resistance ranges and pattern route. Chart supply: StockChartsACP. For illustrative functions solely.

Take into account the next:

• Value is buying and selling above the shaded band, which implies the highest line of the band (inexperienced line) can be your first help degree. The underside band line (pink line) can be the second help degree. 
• The bottom line (cyan) can be utilized to verify a pattern. Since AMZN’s inventory worth is above the bottom line, it is a sign that worth may go greater. 
• The conversion line (pink) is one other pattern affirmation indicator. The route of this line coincides with pattern route. Within the chart of AMZN inventory, the pink line is trending greater, which is one other constructive for the inventory worth.

There are a lot of different methods to make use of the Ichimoku cloud indicator however its predominant function is to behave as a measure of future worth motion which is why you see the cloud extending past the prevailing worth bar. You’ll be able to see a bullish cloud forming with the pink line above the inexperienced line. There’s additionally a lagging span line (white). Whereas it is lagging, it nonetheless is beneficial in figuring out worth route. It is trending up and is above the value charts from 26 bars in the past. That is one other constructive indication.

Any reversal in any of those strains or a reversal within the crossover ought to warn you to a possible reversal in worth route. 

Apple (AAPL): What to Watch Out For

Out of the three, Apple’s inventory worth has held up fairly effectively. Since reaching a excessive in January 2023, the inventory worth has seen barely decrease highs and lows however the inventory has held above its 50% Fib Retracement ranges (see chart under). 

CHART 3: A BULLISH BIAS IN APPLE? The inventory worth is approaching its 23.6% Fib retracement degree and there is a likelihood that worth may transfer greater. Chart supply: StockChartsACP. For illustrative functions solely.

• When you have a look at the Fib retracement ranges from the 2020 low to the January 23, 2022 excessive, worth is approaching its 23.6% degree (upwards), having bounced barely above the 50%  retracement degree. If Apple’s inventory worth crosses above it, then it might doubtless turn into a help degree, contemplating it has been examined as a resistance degree about 5 instances since 2021.
• Observe that from December 13 to the current day outlines a V Backside. If Apple inventory pulls again within the subsequent few days to check its V backside neckline (white trendline), you a minimum of have some thought as to the prevailing market sentiment, which at present leans bullish.
• The relative energy index (RSI) and stochastic oscillator point out that AAPL could also be approaching “overbought” ranges. Which may make you suppose that costs could pull again however bear in mind, these oscillators can maintain oversold readings for a prolonged time frame (so train warning).

One other factor to contemplate: Apple’s earnings, together with these of Amazon, Alphabet, and different shares inside or correlated to large tech could play a big function together with or regardless of the prevailing technical readings. It is a case the place fundamentals could or could not play together with dealer sentiment as revealed by the pre-earnings technical setup. 

Commerce With Warning

Earnings are tough to commerce, significantly for these trying to enter early on to catch the upside. Based mostly on the Nasdaq’s efficiency in comparison with the S&P and Dow, the general market bullishness appears to be favoring tech-heavy names. As we speak’s triple earnings, following Meta’s constructive shock, could enhance all three shares. However they might additionally pull again to their help ranges. So, simply set your stops earlier than you enter any trades. 

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your personal private and monetary scenario, or with out consulting a monetary skilled.