Santa Claus rally eyed for Apple, Amazon, Google

Despite recent earnings disappointments, the online leaders should generate strong holiday sales.

By TheStreet Staff Nov 21, 2012 1:45PM

Woman with a credit card copyright Alistair Berg, Digital Vision, Getty Imagesthestreet LOGO

By Richard Suttmeier

 

Apple, Google, and Amazon hit the skids after their third-quarter earnings reports, but held key technical levels.

 

It's time for another look at three tech giants as Black Friday sales could herald a Santa Claus rally.

 

Google (GOOG) has a "buy" rating from ValuEngine, and was profiled Oct. 16 in Handicapping Key Earnings Reports. The company set an all-time high at $774.38 on Oct. 5 and was sliding going into its quarterly report on Oct. 18. Google missed earnings-per-share estimates by 17.2%, which accelerated the slide after a higher opening high at $706.70 on Oct. 19.

 

A test of the 200-day simple moving average (SMA) on the downside is almost always considered a buying opportunity for a buy-and-trade strategy. Google tested this moving average at $638.41 Friday. The upside is to the 50-day SMA at $709.21, given a weekly close above the five-week modified moving average at $680.90. My weekly value level is $659.15, with a monthly pivot at $679.57 and quarterly risky level at $713.85.

 

Google has improved shopping apps and updated Android maps for an enhanced holiday shopping experience. You can create shopping lists, view products with 360-degree views, find promotions and coupons, and use new maps for about 10,000 stores.

 

Amazon.com (AMZN) has a "buy" rating according to ValuEngine. I profiled the stock Oct. 23 in Apple, Amazon Face Tougher Scrutiny Reporting Earnings.

 

Amazon set a multi-year high at $264.11 on Oct. 14. The company reported quarterly results Oct. 25 with a much larger than expected loss, missing earnings per share estimates by a whopping 187.5%. Investors liked the growth story and the stock popped from a $222.92 close that day to an opening high at $238.71 on Oct. 26. Holders had the opportunity to reduce positions at my semiannual pivot at $236.23.

 

I updated this profile Oct. 30 in Trading Earnings Volatility and in both stories mentioned the annual pivot at $236.23 and that Amazon was above its 200-day SMA.

 

A test of the 200-day SMA at $219.57 occurred last Thursday, providing a buy-and-trade opportunity. Now the stock appears ripe for a re-test of its semiannual pivot at $236.23, and above this is the 50-day SMA at $243.84. A weekly close above the five-week modified moving average (MMA) at $236.10 enhances the upside potential. My weekly value level is $218.67 with my semiannual pivot at $236.23 and quarterly risky level at $263.71.

 

Forrester Research projects a 12% increase in online sales this holiday season, and Amazon should be a major beneficiary as up to 25% of smartphone and tablet owners buy on their mobile devices. Sales of their Kindle products should be on "Fire" and their online Black Friday deals feature video games for Nintendo, PlayStation and Xbox 360 platforms.

 

Apple (AAPL) has a "buy" rating from ValuEngine, and was also profiled Oct. 23 with Amazon. The company set its all-time high of $705.07 on Sept. 21. It also announced quarterly results Oct. 25 and reported a slight earnings per share miss of just 1.4%.

 

On Nov. 2 Apple failed to hold its 200-day SMA, then at $590.33. Last week I had a weekly pivot at $538.56, which was a buying level on Thursday.

 

Consider booking profits on strength to the five-week MMA at $586.46. I show weekly and semiannual value levels at $487.12 and $481.73, with my quarterly risky level at $674.21.

 

Even Apple has announced worldwide Black Friday sales featuring iPads, Ipods and Mac gifts. Last year their deals included $101 off iMacs, MacBook Pros and MacBook Airs, but all we know about this year's Internet-based door-busters are on teaser pages at their online stores.

 

At the time of publication the author held no positions in any of the stocks mentioned.

 

 

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1Comment
Dec 11, 2012 12:38PM
avatar
Will High-Frequency-Trading (HFT) Bots Be The Fuel That Drives The Santa Claus Rally?
Well it would seem so from this really great blog post by Carl Weiss from sceeto a high frequency trading expert
High Frequency Trading has been causing havoc for years in the financial markets. It was very interesting to if you look at a few weeks ago when President Obama was elected just how the markets or hft's showed their displeasure by plunging the market almost straight away on the news. Obama had talked about more regulation on Wall Street, were they trying to express their displeasure with the announcement?Check out the video here . The downward moves have been consistent right up to when the tops execs met with the President recently when , amazingly but I guess not surprising the markets start to rally up pushed by high frequency trading.
One with assume everybody at the meeting perhaps decided to play nice and try and lift the markets especially considering all the negative talk about the fiscal cliff. I would tend to agree with Carl that indeed High Frequency Trading will be the fuel that pushes a Santa Claus Rally as their is a lack of downward hft pressure the last number of days which is unique.
Where the markets go after this is over who knows but expect High Frequency trading to play a big part in it as always.
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