Results analysis: GOOGL, AMZN, AAPL

Three major stocks reported earnings the same day after the market close, missing all of their estimates. Does that mean the tech sector will trend down? Not necessarily. Technically, the charts were looking strong ahead of the gains. Here’s a technical perspective on Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

Alphabet (GOOGL): What to look out for

GOOGL’s breakable gap on February 2 (from October 25, 2022) indicates some importance for the following reasons. It betrays strong bullish sentiment on the day when it is scheduled to report after-hours gains. It also places stock prices above three critical resistance levels:

• The 200 days moving average
• The high of December 2 (2022) leading to the recent rounding belowand
• The high of Oct. 25 ahead of the downtrend that took GOOGL to its lowest 12-month level.

CHART 1: WILL GOOGLE STAY ABOVE ITS 200-DAY MAKING AVERAGE? We’ll see how the stock reacts after its earnings report. If above, the 200-day ma could become a support level. Chart source: StockChartsACP. For illustration only.

• Gaps are often filled, depending on the scenario, and the outcome after filling depends on whether the initial move higher was driven by real expected value or exaggerated exuberance.
• For the current swing to develop into a stronger trend, GOOGL should remain above the 100-day ma.
• A move below the Jan 6th swing low (at 84.86) would likely invalidate any uptrend thesis.

Amazon (AMZN): What to look out for

Adding the Ichimoku cloud overlay to the price chart takes care of some of the critical points a trader should pay attention to. The cloud helps identify trend directions, support and resistance levels.

While Amazon’s stock price may be tempting to buy having hit its 200-day moving average, it’s best to step back and look at the bigger picture (see chart below).

GRAPH 2: AMAZON IN THE CLOUD. The Ichimoku cloud overlay identifies support and resistance levels as well as trend direction. Chart source: StockChartsACP. For illustration only.

Consider the following:

• The price is trading above the shaded band, meaning that the top line of the band (green line) would be your first level of support. The lower band line (red line) would be the second level of support.
• The baseline (cyan) can be used to confirm a trend. Since AMZN’s share price is above the baseline, it is an indication that the price could rise.
• The conversion line (pink) is another trend confirmation indicator. The direction of this line coincides with the trend direction. On the AMZN stock chart, the pink line is sloping up, which is also positive for the stock price.

There are many other ways to use the Ichimoku cloud indicator, but its main purpose is to act as a gauge of future price action, which is why you see the cloud extending beyond the prevailing price bar. You can see a bullish cloud forming with the red line above the green line. There is also a trailing span line (white). Although it lags, it is still useful for identifying price direction. It is showing an uptrend and is above the price chart from 26 bars ago. This is another positive note.

Any reversal of any of these lines or a reversal of the crossover should alert you to a possible reversal in price direction.

Apple (AAPL): What to look out for

Of the three, Apple’s stock price has held up pretty well. Since hitting a high in January 2023, the stock price has seen slightly lower highs and lows, but the stock has held above its 50% Fib retracement level (see chart below).

CHART 3: A BULLISH BIAS AT APPLE? The stock price is nearing its 23.6% Fib retracement level and there are chances for the price to move higher. Chart source: StockChartsACP. For illustration only.

• Looking at the Fib retracement levels from the 2020 low to the Jan 23, 2022 high, the price is approaching its 23.6% level (up) after breaking slightly above the 50% retracement level has increased. If Apple’s stock price crosses above it, it would likely become a support level considering it has been tested as a resistance level about five times since 2021.
• Note that a V bottom outlines from December 13th to present. If Apple stock pulls back to test its lower V-neck (white trendline) over the next few days, you will at least have an idea of ​​the prevailing market sentiment, which is currently bullish.
• the Relative Strength Index (RSI) and Stochastic Oscillator indicate that AAPL may be approaching an “overbought” level. This might make you think that prices might go down, but keep in mind that these oscillators can sustain oversold levels for an extended period of time (so exercise caution).

Another thing to consider: Apple’s earnings, along with those of Amazon, Alphabet, and other stocks within or with Big Tech, can play a significant role along with or despite the prevailing technical readings. This is a case where fundamentals may or may not go hand in hand with traders’ sentiment as illustrated by the technical setup ahead of the profits.

Trade with caution

Profits are difficult to trade, especially for those trying to get in early to take advantage of the upside. Based on the performance of the Nasdaq versus the S&P and Dow, the general market bullishness seems to favor tech-heavy names. Today’s triple gains on Meta’s upside surprise could boost all three stocks. However, they could also retreat to their support levels. So just set your stops before taking any trades.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.