Apple and Amazon are the two tech giants with the highest weighted in the SPY.
Apple and Amazon have the same look on their charts, showing a consolidation period followed by a rebound after a long-term decline.
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When the 50-day SMA crossed below the 200 day SMA in March, it created a death cross, which made bullish traders grow cautious, especially those who used to ride the bull cycle that ended at the beginning of 2021.
A death cross formed on the stock’s chart on June 2, after Apple held up stronger than the general markets. A death cross was printed on Amazon’s chart when it seemed that a bear cycle was on the horizon.
Every bear cycle has bounces to the upside. The periods when individual stocks move anti-trend can be confusing for traders and investors because they don’t know whether the bear cycle is ending or the bull cycle is about to begin.
Although it is not possible to predict with certainty when a bear cycle will end, charts can give clues as to whether there is more upside in the short term.
If the bull flags on their daily charts become the dominant pattern, Apple and Amazon could trade higher over the coming days. The stock has held its support at the eight-day exponential moving average and appears to be stronger than before.
Events affecting the general markets, negative or positive reactions to earnings prints, and news headlines can quickly invalidate patterns and breakouts. “The trend is your friend until it isn’t” and any trader in a position should have a clear stop set in place and manage their risk versus reward.”
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The possible bull flag pattern began on May 24 when the stock reversed course. Between that date and June 1 the pole of the formation was created and a flag was formed. If the pattern is recognized, the measured move is 23%, which means Amazon could soar up to the $147 mark.
Bullish traders will want to watch for Amazon to break up from the upper descending trendline of the flag on higher-than average volume, which would indicate the pattern was recognized.
Amazon confirmed Thursday that it is trading in a downtrend when the stock formed a lower low on June 2.
If the stock does not break up from the bull flag pattern over the next few days, the downtrend will continue. If Amazon trades below the $113 mark, the bull flag will be null and void because the stock fell more than 50% of the pole.
Amazon has resistance above at $125.93 and a support below at $117.16 and $109.30.
There is a reason why Apple’s lightning port could go out quickly.
There is a reason why Apple’s lightning port could go quickly.
Apple’s bull flag began on May 26, with the pole forming over the first four days of the period, and the flag forming over the trading days since. The measured move of Apple’s bull flag is 10%, which indicates the stock could rise to the $158 mark.
Apple is also in a bearish position within the flag formation. On Wednesday, the pattern was confirmed when the stock printed a lower high. The bull flag was less viable because Apple closed the day below the area on two separate occasions.
The resistance is above and the support is below for Apple.
A photo is courtesy of Apple.