Why I'm Selling AAPL & buying MSFT, GOOGL
Short term trades in big time tickers going in opposite directions.
When markets are on fire (and they have been on fire!) it is worth taking time to review the charts of the leaders.
Add in earnings coming up for the big tech names and it becomes a must to dive in with some technical analysis.
I am talking about AAPL, MSFT, and GOOGL.
The stock market will take direction largely based on the earnings and guidance provided by each.
But what do the charts say?
You might expect the charts to look nearly identical but nothing could be further from the truth.
Here’s why I’m selling AAPL here, while buying MSFT and GOOGL.
And it is purely based on the charts.
AAPL
You might first notice the “cup and handle” pattern that has formed for AAPL.
This has been noted by many, the cup formed by the long drawn-out selling followed by a move back up to the prior high. Then the handle after some lighter selling and a retest of the high.
The idea is that a break above this high level, for AAPL that is 196.63, and shares will continue higher.
But if you take a closer look at the chart you will see that shares instead rejected at this level for a second time in three months.
That is a classic double top pattern and reason to be bearish for this ticker.
Also notice the 20-day simple moving average (SMA) has dropped below the 50-day SMA, another bearish signal.
This happened in August 2023 and was followed by continued selling through October. While history is not guaranteed to repeat, it is worth noting.
Lastly, the Relative Strength Index (RSI) for AAPL has curled over sharply and is heading back below 50 if it maintains course for a couple of sessions more.
To be clear, I like AAPL for the long term. I just think we are about to see more selling before we see more upside for this stock.
MSFT
The clean breakout for MSFT was beautiful for traders that identified the bullish pennant pattern forming and got in.
This is why identifying patterns is such a key part of being a technical trader.
Most of the time I trade off of support and resistance levels. But I am always looking for patterns to take advantage of.
While shares of MSFT have already made the big move higher, I still like the trade for more upside.
Ahead of earnings I would only take a partial position because you really never know what risk might be presented on an earnings call.
That said, I also do not want to miss out on any big upside and Microsoft seems poised for exactly that.
If shares do pull back, I’ll wait for the chart to show me where support is showing up and will take a long position at that level.
Overall, RSI remains strong and even showing a bit overbought at this point. But more importantly, notice the difference with the SMAs for MSFT compared to AAPL.
The 20-day SMA for MSFT never crosses below the 50-day SMA. It gets close but then moves higher and away.
This is a sign of strength that I expect to continue.
GOOGL
The pattern here is the Ascending Triangle and GOOGL broke to the upside without looking back.
And that was after the 20-day SMA quickly recovered and crossed back above the 50-day SMA. This is clearly a bullish signal that I look for.
RSI has continued to move higher in lock step with the share price and I see no signs of momentum slowing down.
Similar to MSFT, ahead of earnings I like taking a small position to ensure I don’t miss out on a big move higher.
If shares pull back, I think support will be found relatively quickly so if the opportunity comes it will need to be siezed without hesitation.
I also think GOOGL has a little catching up to do relative to its peers’ recent stock performance.
I hope you are enjoying your weekend and have plans for a big week of trading ahead.
Thank you for reading!
-Nate
When you are ready for TrendSpider, please use the link below to sign up!
Anchored VWAP is just one of the many top notch features TS provides.
Check out TrendSpider.
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.