Time to buy Apple, Amazon and Netflix?
These leaders can give important signals about the broader market. With one of their charts showing a bottom, investors should take notice.
- The decline took AMZN back to the early-2011 highs, line a, as well as the uptrend, line b. AMZN had higher lows on Tuesday and closed up for the day
- The upside targets from the trading range breakout (line a) are in the $220-$225 area
- The RS analysis indicates that AMZN is outperforming the S&P 500, as it broke through resistance (line c) in late April. The RS is above its long-term uptrend, line d, that goes back to the 2008 lows
- The RS made a new high last week with prices, which is positive
- The daily on-balance volume (OBV) also confirmed the new highs and shows a bullish pattern, as it surpassed resistance at line e
- If this week’s lows are violated, there is further support between $181.50 and $186
- NFLX has developed a narrow trading range over the past two months, with good support, line g, now at $224.41-$225.30
- Initial resistance stands at last week’s high of $249.62 and then at $254.98-$258, line f
- The daily OBV has been diverging since the November 2010 highs, as it shows a pattern of lower highs (line i). It is above its weighted moving average (WMA) and now has short-term support at its uptrend, line j
- The weekly OBV (not shown) did confirm the April highs, which is more important
- If support at line g is broken, NFLX could decline to the $210 area
- AAPL tested the $330 level and the former downtrend (line a) on Tuesday before closing higher. The six-month trend line support comes in at $324, with the rising 200-day moving average (MA) at $316
- The longer-term RS analysis is positive, but it came close to long-term support (line e) this week. The RS violated six-month support, line d, in April, which was a sign of weakness
- The RS needs to move through its downtrend, line c, to signal that AAPL is once again acting stronger than the S&P 500
- The daily OBV held support, line g, in April, but is still below its weighted moving average. The weekly volume (not shown) is acting weaker and is below its WMA
- There is initial resistance for AAPL at $340-$342 with stronger resistance at $350
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