This morning’s market activity was softer as the Nasdaq Composite is taking a breather, trading lower on what appears to be profit-taking as well as some negative movement in one of the index’s Canary in the Coalmine stocks, Apple Inc. (NASDAQ:AAPL).
Today’s Three Big Stock Charts takes a look at the technical worries facing Apple and the equally popular Amazon.com, Inc. (NASDAQ:AMZN). Also, a potential opportunity looms for traders looking to buy the dips in the healthcare sector as Cerner Corporation (NASDAQ:CERN) appears to be nearing a technical buy signal.
Apple Inc. (AAPL)
Shares of Apple have been going through their usual post-product-announcement selling pattern, as the stock is dragging after its product announcement-day pop. But the trend indicates that this problem started before the announcement of the new iWatch and other gizmos.
The charts suggest that the time to buy is still off in the future, not now.
- Apple shares have always been the poster child for “buy the rumor/sell the news” activity. Given this, the decline in shares since the product announcements is expected.
- The last two trading days have seen a bearish combination of signals as the stock has broken below its 50-day moving average AND below its bottom Bollinger Band. This will accelerate selling pressure over the next few weeks.
- Support from the charts come at the following levels…
- $155: Shares are already below this price. Another daily close will consider this support as broken.
- $152: Drawn from the chart activity in May, June and July, the $152 price has some potential for support, but is likely to give as the volatility selloff continues.
- $144: Approaching a 15% decline from the stock’s highs, $144 offers stronger support potential as this was also the region that Apple stock bounced and formed a Double Bottom from in June and July of this year. A break below this price will serve as a warning that a longer-term correction is in place on Apple.
Amazon.com, Inc. (AMZN)
Amazon has turned from a long-term relative strength leader to an intermediate-term laggard as the stock has been in technical trouble since July. Now, the shares are preparing to make another move lower as the technical tide continues to lower Amazon.com stock’s intermediate-term outlook.
- AMZN shares have failed to rally investors to buy as the stock appears a relative bargain, trading more than 10% from its highs. The trendlines suggest that Amazon has yet to finish its decline as traders migrate from this “overcrowded” trade.
- Round-numbered resistance from the $1,000 price level is now firmly in place and rejected the stock earlier this month. With the 50-day moving average trending lower, our models expect to see additional downside risk over the next month or two.
- Three price levels should stand out as potential support:
- $960, which is just below current prices. This price has been a support/buying level for the shares dating back to May 2017.
- $920 stands out as a potential support level based on the price activity in April 2017.
- Finally, $900 as this would serve as round-numbered support for the stock and is also in the vicinity of the stock’s 200-day moving average which is still rising.
Cerner Corporation (CERN)
Healthcare and related stocks have been hitting a stride of late as regulatory changes could actually come to fruition. As a result, Cerner shares have been in rally mode, but profit-taking is bring the stock back to an attractive price.
The charts suggest that traders may want to watch a certain price for the next buy signal.
- CERN stock is working off an overbought signal from the RSI that occurred after the stock rallied more than 16% in a month. Now, the stock sits at chart support at $69, which has held for the last three days but is threatening to break.
- Cerner shares’ 50-day moving average recently initiated an intermediate-term buy signal as it transitioned into an ascending pattern. Our historical data suggests that this will help the stock continue to climb towards a target of $75-plus.
- We expect the short-term to break below $69 given the increase in selling volume. However traders will target $69 as a buying price. As such, this is expected to be the short-term bottom that will launch CERN back to its highs above $75.
As of this writing, the Johnson Research Group did not hold a position in any of the aforementioned securities.