Three massive bellwether shares introduced earnings on the identical day, after the shut, and so they all missed estimates. Does that imply the Expertise sector will head decrease? Not essentially. Technically, forward of earnings, the charts regarded sturdy. This is a technical perspective on Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).  

Alphabet (GOOGL): What to Watch Out For

GOOGL’s breakaway hole on February 2 (beginning October 25, 2022) signifies some significance for the next causes. It betrays sturdy 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 transferring common
• The December 2 (2022) excessive resulting in the latest rounding backside, and 
• The October 25 excessive previous the bearish swing which introduced GOOGL 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 out to be a assist degree. Chart supply: StockChartsACP. For illustrative functions solely.

• Relying on the state of affairs, gaps usually get crammed, and the end result following the fill will depend on 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 the 100-day MA. 
• 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 worth chart takes care of a number of the vital factors a dealer needs to be searching for. The cloud helps determine pattern course, assist, and resistance ranges. 

Whereas Amazon’s inventory value could also be tempting to purchase given it gapped as much as its 200-day transferring 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 assist and resistance ranges and pattern course. Chart supply: StockChartsACP. For illustrative functions solely.

Contemplate the next:

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

There are various different methods to make use of the Ichimoku cloud indicator however its most important objective is to behave as a measure of future value motion which is why you see the cloud extending past the prevailing value bar. You possibly can 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 value course. It is trending up and is above the worth charts from 26 bars in the past. That is one other constructive indication.

Any reversal in any of those traces or a reversal within the crossover ought to provide you with a warning to a possible reversal in value course. 

Apple (AAPL): What to Watch Out For

Out of the three, Apple’s inventory value has held up fairly effectively. Since reaching a excessive in January 2023, the inventory value 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 value is approaching its 23.6% Fib retracement degree and there is a probability that value may transfer increased. Chart supply: StockChartsACP. For illustrative functions solely.

• In case you have a look at the Fib retracement ranges from the 2020 low to the January 23, 2022 excessive, value is approaching its 23.6% degree (upwards), having bounced barely above the 50%  retracement degree. If Apple’s inventory value crosses above it, then it could doubtless turn out to be a assist degree, contemplating it has been examined as a resistance degree about 5 instances since 2021.
• Word 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 not less than have some concept as to the prevailing market sentiment, which at present leans bullish.
• The relative power index (RSI) and stochastic oscillator point out that AAPL could also be approaching “overbought” ranges. That may make you suppose that costs might 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 massive tech might play a big function together with or regardless of the prevailing technical readings. This can be a case the place fundamentals might or might not play together with dealer sentiment as revealed by the pre-earnings technical setup. 

Commerce With Warning

Earnings are tough to commerce, notably 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, might enhance all three shares. However they might additionally pull again to their assist ranges. So, simply set your stops earlier than you enter any trades. 

Disclaimer: This weblog is for academic 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.