The market’s holiday shortened week will continue today with lighter volume and the chance that the market will see increased volatility as a result. We’ve mentioned that there are a growing number of companies within the Nasdaq 100 Index that are moving below their 50-day moving average. This could be critical for the market as a breakdown in technology would suggest that the “risk on” trade may be coming off, which would add selling pressure to the market as we head into July trading.
Today’s three big stock charts observe Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN) and Adobe Systems Incorporated (NASDAQ:ADBE) as these are the latest of the stocks falling below the trendline that is often referred to as a stock’s “friend.”
Alphabet Inc (GOOG)
Alphabet shares have spent the last week breaking into a volatility selloff that is now targeting lower price support as the stock has been taken over by selling forces. The current technicals suggest that the online gain is headed lower before hitting support.
- Friday, shares of GOOG broke below their bottom Bollinger band, increasing the selling volume on the stock as technical traders take the move as a bearish short-term sell signal.
- Alphabet shares broke through their 50-day moving average last week as well, sending another bearish signal to traders that are now locking-in profits on this stock that had been more than 22% higher for the year.
- With the 20-day moving average preparing to cross below the 50-day, a lower price target is likely over the next two months. As of today, support at the 200-day moving average, currently located at $835, is the closest support level that GOOG shares should benefit from support. Watch this level closely as the shares see more selling pressure.
Amazon.com, Inc. (AMZN)
The unicorn in the group, heck the entire market, has been Amazon, so investors should be taking their lead from what its shares are doing.
As of last week, AMZN stock started falling into the same technical category as many other large-cap tech names as the shares’ strengths are deteriorating.
- Friday’s selling on Amazon shares saw the stock move below its 50-day moving average. This is the first time that the stock has traded below this key trendline since early January.
- Another day of selling today will break shares of AMZN into a bearish volatility selloff as the stock would be trading below its lower Bollinger Band. Traders will want to watch how Amazon stock trades around $950 as this is where this critical indicator resides.
- A move lower could put pressure on $940, which is a historical chart support level for AMZN shares in 2017. We should see the stock try to find some support at or around this price. A break through this price will indicate a high likelihood that Amazon shares will retrace to $850.
Adobe Systems Incorporated (ADBE)
After another great quarter of earnings, traders started taking profits from Adobe stock to the tune of 5%.
Now, ADBE sits at critical support levels that the shares must hold to avoid another round of selling.
- Year-to-date, Adobe shares are trading 15% higher for the year, one of the stronger performers in the Nasdaq 100 Index as well as the broader indices. This means that the market and traders will take their lead from a change to short-term bearish conditions in this market leader.
- Friday’s close put shares of ADBE below their 50-day moving average for the first time since early June when the stock quickly rebounded ahead of an upcoming earnings report.
- From a short-term perspective, Adobe stock broke below its 20-day moving average, which has now transitioned into a short-term bearish trend. This indicates that the stock is likely to continue its decline, targeting at least 6% of downside before hitting the first support level at $130. From there, Adobe could slip to its 200-day moving average at $120.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
