Here we go again. The Dow Jones Industrial Average cracked through 24,000 this morning as investors will have all the symptoms of Buyers Fever heading into the last trading day of the month. This month will mark the eighth positive month for the market, suggesting that the rally should be getting too long in the tooth. Nonetheless, the reality is that money is still pouring into stocks and the robust market is providing ample opportunities for the bulls and bears.
This morning’s three big stock charts reviews the technicals of Advanced Micro Devices, Inc. (NASDAQ:AMD), Apple Inc. (NASDAQ:AAPL) and Alibaba Group Holding Ltd (NYSE:BABA) as this trio is putting traders in an uneasy spot with recent underperformance.
Advanced Micro Devices, Inc. (AMD)
I wanted to update my last coverage of Advanced Micro Devices, as the stock has now worked its way into a must-win technical situation. After a dead cat bounce rally that started in November, AMD shares are headed towards chart support that is going to be the make-or-break that results in a 5-10% rally or selloff.
- The early November selloff was accompanied by a “death cross” when AMD shares’ 50-day moving average crossed under their 200-day moving average. This is a sign that the downward trend is gaining momentum.
- AMD shares have entered a bear market again according to the Chande Trend Meter. This indicator monitors direction, momentum and volatility, which are all currently working against Advanced Micro Devices stock.
- Finally, AMD shares are heading towards a test of the $10 price. This price is high impact due to its round-number aspect and the stock’s past reaction to trading at this level. A break below $10 will increase selling pressure and target a 10-12% decline in AMD.
Apple Inc. (AAPL)
With all the buzz over the new devices out of the way, we’re beginning to see some “sell the news” activity on Apple.
AAPL stock recently posted a bearish technical pattern that suggests lower prices are on the way.
- AAPL shares just came off of their second attempt to rally above $175. The second rejection of this resistance level posted a “double top,” which is one of the more reliable indicators that an intermediate-term top has been placed on a stock that is ready to correct.
- AAPL shares still have support in the form of their 50-day moving average to rely on. This trendline is ascending at $163, which should provide a catalyst for technical traders to begin buying the stock on a dip to that price.
- As a back-up, AAPL’s 10-month moving average sits at $150. This round number and trendline combination would likely provide a great buying opportunity for those patient traders. A move to this price would also represent more than a 10% decline in the shares, a move that the market would consider a “healthy correction.”
Alibaba Group Holding Ltd (BABA)
Alibaba doesn’t participate in the Cyber Monday craze as the company has its “Singles Day” in November.
Of course, its biggest shopping day of the year didn’t help shares as they are now breaking down technically. Traders and investors holding BABA shares may want to take a gut check of the following:
- Like AAPL, Alibaba shares posted a double top in November, indicating that BABA stock is at-risk of a correction as technical trades begin to move out of the stock as the trend decays.
- The last two trading days have seen BABA shares break their 50-day moving average. This trendline has been in a bullish pattern, but is now transitioning into a neutral-to-bearish outlook.
- Alibaba shares are heading towards an oversold signal from their RSI, but the momentum indicators, such as the Chande Trend Meter, are suggesting that the momentum will force BABA much lower before a tradable bottom is put in place.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.