Has the juice been squeezed from the large-cap technology trade? That’s what many traders are asking themselves this morning as some of the larger companies within the group are listing lower, despite a positive earnings season.
Today’s three big stock charts cover three of the largest as shares of Microsoft Corporation (NASDAQ:MSFT), Facebook Inc (NASDAQ:FB) and Adobe Systems Incorporated (NASDAQ:ADBE) are continuing to indicate that the market is ready for a little more than a rest.
Microsoft Corporation (MSFT)
After a positive earnings report, Microsoft shares have struggled to tread water as the rest of the technology sector is starting to draw lower. This is from a combination of the sector having grown tired from taking a leadership role and a “sell the news” view from traders after earnings.
- Clear chart resistance at $75 has maintained a bearish lid on MSFT stock as the shares were only able to consolidate at this level last week. Shares are currently testing the $72.50-level, which is the top from June. A move lower will trigger more selling.
- The RSI is coming out of a technically overbought reading on higher volume, indicating that the market has been selling the success of the recent Microsoft earnings report heavily.
- We should see MSFT find some technical support at $71, the site of the stock’s 50-day moving average which has also been rising.
Facebook Inc (FB)
Facebook shares surged higher on Thursday after their bullish earnings report, but the stock had already been priced to perfection ahead of the report. For now, the long-term investors need to wait for the stock to come back to earth instead of paying the “earnings premium” for the shares.
- As it stands, the FB stock chart is indicating that a short-term bottom may act out at $170, but this will be short-lived given the shift in momentum.
- From a chart perspective, $160 is the level that traders will be looking at for a round of support as this is where Facebook consolidated ahead of earnings.
- In a pinch, the $155-level will be the next round of support from FB stock’s 50-day moving average. This trendline has been on the rise, indicating that the stock remains in an intermediate-term bullish phase and it is likely to revisit its recent highs.
Adobe Systems Incorporated (ADBE)
Adobe is one of the tech companies that report later in the season, so it tends to be a trend breaker.
ADBE stock is following the rest of the market recently as it struggled to make new highs and is now seeing profit-taking ahead of its reports.
- Adobe is seeing what could be considered a “sell the rumor” pattern ahead of its earnings announcement. This builds bullish potential for the stock from our model’s perspective.
- ADBE shares should begin to see technical support come in to play as they approach $143, the site of their 50-day moving average, which is trending higher. Adobe stock has seen this trendline provide support four times since the stock turned bullish earlier this year.
- Shares of ADBE are working towards an oversold reading of their RSI, indicating that even a poor earnings report will be met with buying pressure as traders scoop up the technical “bargain.”
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
